It has been a while since I've discussed Sears, or Eddie Lampert. Like most other people, I was surprised by the move to acquire Sears, but Lampert has been doing well with the company. Now, and article from Fortune discusses the weaker recent earnings of Sears, and what Lampert may do to revive the company.
Assuming Lampert does have a trick up his sleeve, what might he do to wrest more value out of the chain? Investors closely track cash flows and some analysts think Lampert could surprise the market by wringing yet more cash out of the balance sheet. Credit Suisse analyst Garry Balter estimates that Sears could free up about $5 billion over the next two years – cash that could be used for further stock repurchases – simply by delaying payments to suppliers. "This is something that retailers have been doing for years," said Balter, adding that Sears has been a laggard here…
…Another strategy may involve real estate. Sears has around 3,800 stores worldwide, just over half of which are leased. Analysts generally estimate that Sears' owned and leased properties could be worth between $15 billion and $20 billion. Louis Taylor, a real estate analyst with Deutsche Bank, said mall owners have told him they detect a change of tone on the part of Sears officials, who previously had not been interested in discussing the sale of stores. "Now," Taylor said, "it's no longer a dead end conversation."
I tend to stay away from retail stocks, just because I think it's too *faddish* (is that a word) of a business. But I do think Lampert is an interesting guy, and I like watching him find ways to unlock new value from the company.