Sears: Bad Earnings Or Just Less-Bad Earnings? (SHLD)

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Sears Holdings Corp. (NASDAQ: SHLD) is set to report earnings on Thursday morning.  First Call has estimates pegged at $3.10 EPS on $15.26 Billion in revenues.  Next quarter estimates are $0.36 EPS on $11.4 Billion in revenues, and fiscal January-2009 estimates appear to be $4.15 EPS on $49.5 Billion in revenues.

Because of the estimate cuts and because this it looks like the few targets out there are $88.40 on average.  Shares closed up a fraction today at $101.60.  Its market cap is just shy of $14 Billion, and its 52-week trading range is $84.72 to $195.18.  So you can see this has already been chopped in half after poorer and poorer results.  If options were any indicator, we’d be looking at a spread and determine that options traders are braced for a move of $5.00 to $7.00 in either direction.

It is no secret at all that anything tied to the masses and middle market is suffering if it is in retail.  The retailer stinks right now with poor monthly sales.  But this actually leaves room for some good news.  If not, it at least leaves room for less-bad news.  The company is acting like it at least wants to drive up its web sales.

It also just axed the CEO, who was really just the patsy.  We do not know if Eddie Lampert is letting the retail side get so bad so he can more easily bust this up and go for the "sum of the parts" strategy that he has used before.  It sure feels that way.

What about that crazy buyout offer for Restoration Hardware (NASDAQ: RSTO)?  At least retailers have been acting well of late and haven’t been selling off even on bad news.

Jon C. Ogg
February 27, 2008