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SHLD files to spinoff Orchard Supply Hardware

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I'm not a SHLD shareholder, but I think he should just shut down K-Mart. I think Sears can still be a good business, but that they should focus on rebranding Sears around hardware, appliances and similar items. I was in Sears a couple days ago and half the store is stuff like clothes and jewelry. Do a lot of people really go clothes shopping at Sears? Sears comes to mind when I want a lawn mower, refrigerator or air conditioner. Go walk around a Sears. In addition to the good products they sell, they sure sell a lot of garbage.


I don't see much value in K-Mart. The stores are disasters and they've already lost the battle between Wal-Mart and Target. I also don't think K-Mart's real estate value is anywhere close to what Lampert thinks it is.


My other thought is to unload the K-Mart assets for whatever he can, and use the cash to purchase some other brands. Instead of focusing on being a retailer, build Sears into a collection of brands to go along with Kenmore, Craftsman and DieHard (and sell those products through other retailers), in addition to continuing to build their Home Services division.


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Here's an interesting article (not much depth to it, and kind of misses the point, but interesting nonetheless wrt the consolidation point in particular)




5. Sears


The parent of Sears and Kmart — Sears Holdings — is in a lot of trouble. Total revenue dropped $341 million to $9.7 billion for the quarter which closed April 30, 2011. The company had a net loss of $170 million. Sears Holdings was created by a merger of the parents of the two chains on March 24, 2005. The operation has been a disaster ever since. The company has tried to run 4,000 stores which operate across the US and Canada. Neither Sears nor Kmart have done well recently, but Sears' domestic locations same store numbers were off 5.2% in the first quarter and Kmart's were down 1.6%. Last year domestic comparable store sales declined 1.6% in the total, with an increase at Kmart of .7% and a decline at Sears Domestic of 3.6%. New CEO Lou D'Ambrosio recently said of the last quarter that, "we also fell short on executing with excellence. We cannot control the weather or economy or government spending. But we can control how we execute and leverage the potent set of assets we have." D'Ambrosio needs to pull a rabbit out of his hat soon. Sharex are down 55% during the last five years. D'Ambrosio's only reasonable solution to the firm's financial problems is to stop supporting two brands which compete with one another and larger rivals such as Walmart (NYSE: WMT - News) and Target (NYSE: TGT - News). The cost to market two brands and maintain stores which overlap one another geographically must be in the hundreds of millions of dollars each year. Employee and supply chain costs are also gigantic. The path D'Ambrosio is likely to take is to consolidate two brand into one — keeping the better performing Kmart and shuttering Sears.

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