On a fundamental level, Sears Holdings (SHLD) appears to be in a tailspin, with rapidly declining same-store sales and earnings. But the stock is up 82% year to date, a testament to the power of hope, short-covering and wishful thinking. Investors have been waiting for controlling shareholder Eddie Lampert to pull a rabbit out of his hat, and any speculation about that rabbit has been sending shares higher this year.
Sears posted 54 cents of EPS, 22 cents below expectations. Same store sales were a mess across the board: “Sears Domestic’s comparable store sales declined 4.1% in the fourth quarter and 3.0% for fiscal 2011, Kmart’s comparable store sales declined 2.7% in the fourth quarter and 1.4% for fiscal 2011, and Sears Canada’s comparable store sales declined 7.5% in the fourth quarter and 7.7% for fiscal 2011.”
But a plan the company released today is winning cheers in the market, despite the dismal fourth quarter earnings report. Sears says it will spin off its Hometown and Outlet stores and some hardware stores in order to raise $400 million to $500 million. The company also plans to sell 11 stores to General Growth Properties (GGP) for $270 million.
In addition, Sears says it will cut expenses at the higher end of its previously announced goal of $100 to $200 million, as well as reduce inventory.
The company gave many more specifics about its plans to shore up its balance sheet than its plans to grow revenue and income, however. The release mentions “combining our massive retail assets with a set of technology platforms” and “targeted marketing, margin actions, and bringing in new talent to strengthen our merchandising and leadership team.”
Clearly, none of that is deterring investors this morning.
No comments:
Post a Comment