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The Chickens Have Finally Come Home To Roost At Sears
In January of 2009 (nearly three years ago, which is ironic), I went bearish on Sears due to a variety of reasons, the least of which was less than competent management (hedge fund managers don't necessarily make good department store managers), macro conditions and fundamentals sloped towards hell. Although this was initially a very profitable trade, the rip roaring bear market rally of 2009 shredded the short profits - turning them into losses if uncovered, and simutaneously disguised the many issues that we brought up in our initiail short analysis. Well, you can run but you can't hide, and the truth will ultimately rear its head. On that note...
CNBC Reports In the Wake of Poor Sales, Sears to Close Stores
Sears Holdings plans to close between 100 and 120 Sears and Kmart stores after poor sales during the holidays, the most crucial time of year for retailers.
In an internal memo Tuesday to employees, CEO and President Lou D'Ambrosio said that the retailer had not "generated the results we were seeking during the holiday."The closings are the latest and most visible in a long series of moves to try to fix a retailer that has struggled with falling sales and shabby stores.
Sears Holdings Corp. said it has yet to determine which stores will close but said it will post on the list online when it's compiled. Sears would not discuss how many, if any, jobs would be cut.
The news sent shares of Sears [SHLD 36.50 
-9.35 (-20.39%) 
] to their lowest point in more than three years, and it was posting the biggest percentage decline in the S&P 500 Index.
As does Bloomberg: Sears Plunges on Plans to Close as Many as 120 Stores
Sears Holdings Corp., the retailer controlled by hedge-fund manager Edward Lampert, tumbled the most in... Sears fell (SHLD) 18 percent to $37.65 at 9: 42 a.m. in New York,...
As shoppers may realize, the retail store is at a disadvantage this year for sales activity has simply been weak. Thus, U.S. Stores Ramp Up Bargains as Sales Lag. I discussed the effects of this on retail malls last week in The Greatest Risk To Retail Commercial Real Estate Is? Sovereign Debt! Macro Headwinds! Popping Bubbles! Busted Banks! No, It's The Internet! The kicker is the effect on Sears will be most exaggerated since it has real estate, fundamental, macro, industry induced and management issues to deal with as well as the paradigm shift towards internet shopping (which it should have been able to hedge with Sears.com and Kmart.com, alas this brings us back to the management issues, doesn't it?. BoomBustBlog subscribers, please refresh your memories by downloading the following...
Sears Holdings Research Report - Retail 2009-01-27 01:13:07 50.42 Kb
Sears Holdings Research Report - Pro 2009-01-27 01:11:41 313.25 Kb
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Heckuva job Eddie. Pilfer the company for hundred's of millions and then sink-the-ship.
That is called retail
In my experience, there are three classes of people who, when they run a company, inevitably run it into the ground: bankers, private equity fund managers, and management consultants.
having work for several smallish family businesses there are plenty of idiots out there beyond just those three types.
Typically, I think an underestimated number of businesses just sort of hit the lottery. Sometimes they get going because of a great idea, great innovation in products or services, but that does not mean the person(s) that started it or made it grow a lot are necessarily good managers.
There are businesses that have monopolies or cartels in regional territories that turned out to do great with plain old population growth, like beer distributors (see McCains wife family fortune, they start in a low op state that grew immensely), car dealers, many heavy construction products like concrete blocks that cant be ship to far. All these companies could do great for many years in spite of horrible management
Also, some companies sort of stumble on things. I worked for a consulting firm that did traditional engineer consulting on things like foundations, slopes, earthwork, drilled soil borings, they happend to have worked with IBM the year before IBM decided it was time to spend mega bucks on cleaning up groundwater and IBM asked them if they could drill monitoring wells to measure their contamination...which ballooned into a huge business in just a few years. My company was on the bleeding edge because we did the first big job for a deep pcoket client, developed expertise, got a great resume to sell to other clients, and then we were first in line to get into clean up business to. After a few years, they took company public and made huge money, they all thought they were geniuses. I thought they were lucky. They paid my 401k in stock, and it tanked when Repubs took control of Presidency and sqaushed environmental regs....
Even successful entrepeneurs and succesful managers that are at the helm when great growth happens are not always that amazing
Peter Lynch talks about a gravel pit being one of the best business opportunities on the planet. Most gravel pits are local monopolies, because it is difficult to haul around heavy rocks.