Sears Earnings Smear (SHLD)

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Sears Holdings Corporation (NASDAQ: SHLD) posted a loss this morning, and it is being reflected in the shares.  The retail giant controlled by Eddie Lampert saw a $56 million loss, which translated to -$0.43 EPS net and -$0.53 on an adjusted EPS basis on a 5.8% drop in revenues to $11.1 Billion.  First Call had expectations of $0.15 EPS on revenues of about $11.4 Billion.

K-Mart same store sales fell 7.1% and Sears same store sales fell 9.8%, with a total domestic same store sales result of -8.6%.  The only good news is that the CEO noted that since May 3 the sales declines have moderated.  Unfortunately, the company also expects sales and margins to decline for the remained of 2008 due to costs and weak economic conditions overall.  Sears also only repurchased 400,000 shares for some $40 million during the quarter.

Sears seems to have lost its way, which may come from the ‘Department of No Kidding.’  Shares are down over 50% from the 52-week high of $183.25, and shares have already recovered off of the pre-market lows.  At one point a few minutes ago it looked like shares were trading at $86.00 to $87.00 after an $89.36 close yesterday.  On last look shares were back up to $89.00.

It seems the time has come for Lampert to start looking at more brand financing and creative alternatives out there to unlock more value.  As far as a real or pure retail story, this just isn’t working.

Jon C. Ogg
May 29, 2008