WASHINGTON, January 5, 2017 – Sears, Macy’s, Kohl’s: All three have recently reported hugely disappointing end-of-year 2016 holiday sales numbers. As of Thursday, Sears (Sears Holdings, Inc.; symbol SHLD), Macy’s (M) and Kohl’s (KSS), as well as their unhappy stockholders, have paid the price.
Just after the noon hour today, Kohl’s, is down a whopping 10 bucks and change, a 20 percent one-day loss. As we write this, KSS is trading just below $42 per share after trading as high as $59.67 in early December.
Macy’s, which had traded as high as $45 per share early in the Christmas rush, has been steadily sinking since then. But today, as M’s numbers sank in for traders and investors alike, its shares are currently trading below $31, down today alone by nearly $5 per share as of this writing, a nearly 14 percent loss on the day.
Sears’ stock bottomed at $8 per share in December as news of its poor sales figures, which include numbers from the company’s beleaguered K-Mart stores, began to leak out. Having traded as high as $20.42 just last January, the stock has lost nearly 50 percent of its value since that time. It’s the kind of action that shareholders have been regularly experiencing lately due to the consistently wretched management of the company by investing “genius” Eddie Lampert, who’s steadily driven this onetime retail colossus into the ground over the last decade.
Sears’ stock, oddly enough, is up 26 cents per share today, currently standing at $10.62 per share, and it’s actually risen steadily if incrementally since it hit that $8 December bottom. The reason for this was made clear to investors today as, according to CNBC, SHLD made moves
“…to boost its liquidity as it struggles to hang on amid another dismal holiday quarter.
“Through a series of maneuvers that include selling its Craftsman business to Stanley Black & Decker [SWK] and closing 150 unprofitable Sears and Kmart stores, the department store chain has cobbled together more than $1 billion in liquidity, with plans to raise another $1 billion off of its real estate.”
The Wall Street Journal provided more details on the transaction, plus a great interactive map that can display which Sears and K-Mart stores may be closing their doors in your area. According to the WSJ,
“Sears is flipping the Craftsman brand to Stanley Black & Decker Inc., and it will license back the ability to sell Craftsman-branded products royalty-free for 15 years after the deal’s closing. The acquisition gives Stanley the rights to develop, manufacture and sell Craftsman-branded products outside of Sears.
“At present, just 10% of Craftsman-branded products are sold outside of Sears. Stanley Black & Decker said the deal will help boost Craftsman sales in untapped channels.”
In other words, Sears is essentially selling one of its few remaining crown jewels to stay afloat a little longer as it executes its new plan to shutter those 150 stores (mostly K-Marts), meaning a substantial yet thus-far unreported number of K-Mart workers will be getting pink slips to celebrate the New Year. Calling Donald Trump!
The Maven recalls CNBC investment wild man Jim Cramer singing Eddie Lampert’s praises on his show a decade or so ago as we recall, claiming he’d infuse new life into his newly formed retail empire by sprucing up Sears and K-Mart stores alike and making oodles of money in the process.
The problem was (and is) that Lampert never really gave a damn about the retail business of either chain, penny pinching away with occasional new schemes for increasing sales or creating boutique sub-stores to attract a wider range of consumers.
What Lampert did care about was the vast amount of often-valuable real estate underneath all those ubiquitous but decaying Sears and K-Mart stores. It was clearly his attention from the get-go to sell off the properties (and the heck with the stores) in order to reap huge profits on those sites. Alternatively, he’d spin some of these properties off as a REIT (which he actually did). In other words, real estate profits, not retail profits, were Lampert’s actual aim.
As a result, Sears and K-Mart stores alike have remained their old, dowdy, unattractive selves while other retailers have kept up with the times. Even Sears’ attempt to spruce up its retail clothing line by buying popular mail order retailer Lands’ End several years ago flopped, as Lampert’s lousy retailing nearly ended up killing off that famous clothing brand. He eventually spun the company off for a loss, another bright idea down the tubes, and now once-again publicly traded Lands’ End, now laden with Lampert’s unwanted debt, is back to trying to make a living on its own back in its famous Wisconsin cornfield location. (Trading symbol: LE.)
Worse yet, online merchants like Amazon have eaten Sears’ lunch, not to mention that of other retailers like Macy’s and Kohl’s. That’s a particularly ironic turn for Sears, which, along with now-defunct Montgomery Ward, essentially invented catalogue sales early in the last century—a business that should have been easy to get on line and market aggressively before the more aggressive Amazon.com (AMZN) moved in at light-speed to own that online space utterly.
The Maven predicts that Sears’ still in-demand Kenmore line of appliances will go on the block next as more and more stores shutter their doors, likely killing off some smaller malls in the process.
Lampert’s real-estate dream was seriously damaged when the Great Recession took hold. But now we’re likely looking at the kind of endgame Lampert had in mind all along. He never cared about his stores, and they showed it. Now that real estate is finally getting its groove back, so is Eddie.
Macy’s for its part seems to have had a better grip on things, but it’s still getting rid of a boatload of stores as well as a result of gloomy Christmas sales figures. As a result, M is going to close 68 stores and cut some 10,000 jobs. Ho, ho, ho!
As for Kohl’s, as of this writing there is currently no news from that retailer with regard to possible store closings and layoffs. But in light of 2016’s dismal closeout, some retrenching by that company is still within the realm of possibility.
Numbers from JC Penny Co. (JCP), Dillard’s Inc. (DDS), Nordstrom (JWN), Target (TGT) and Walmart (WMT) have also been hit by poor sales, and most of them are down substantially in Thursday trading, save for Walmart, which is up slightly on the day. That Dow stock aggressively moved to battle Amazon on its own turf with its acquisition of Jet in 2016. Now a Walmart unit, Jet has, in turn, just acquired online clothing, footwear and accessories retailer ShoeBuy, which may be helping give WMT a bounce today.
Bottom line: The retail landscape is changing rapidly in a very obvious way. As a result, the bricks-and-mortar retail sector will continue to suffer until it can find an efficient way—if there is one—to battle online sales. Or join them.
One other thing is clear: Soon-to-be-President Trump, despite his recent job-saving victories with Carrier, Ford, et. al., has his work cut out for him, if poorly-managed companies like Sears and now Macy’s continue to lose more jobs than the new President is able to help create.
Only Walmart, and perhaps surprisingly, Best Buy (BBY) seem to be holding their own in the consumer retail shopping space, excluding building mega-store chains Home Depot (HD) and Lowe’s (LOW), although these three, along with most retailers, are down today apparently in sympathy with the retail bears who continue to clobber Kohl’s and Macy’s and will probably get back to crushing Sears Holdings shortly.