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Sears Plunges As CIT Reins In Loans (Again)

Tyler Durden's picture





 

While so many were hoping for the siren-call of private-equity or perhaps a reverse-merger MBO with RadioShack, CIT has once again managed to pour well-risk-managed-credit-extension cold water on Sears short-squeeze. SHLD is down 6% following Reuters reports (via The Orlando Sentinel) that CIT will again stop providing loans to suppliers of Sears Holdings as the lender/factor awaits further information of the company's health. Volume picked up dramatically as the stock fell and we note that SRAC (the more active 5Y CDS contract) is leaking wider but has surged around 400bps (to 1800bps) in the last week (as the stock has been treading water off its spike squeeze highs on 1/23).

 

Orlando Sentinel: CIT Keeping Sears On A Short Leash

NEW YORK (Reuters) - CIT Group Inc will again stop providing loans to suppliers of Sears Holdings Corp after Tuesday as the business lender awaits more information on the retailer's financial health, two retail sources told Reuters on Monday.

 

CIT is keeping the operator of Sears department stores and the Kmart discount chain on a tight leash, the sources said, after the company posted 18 straight quarters of sales declines.

 

Sears is scheduled to report annual results on February 23, when Chairman Edward Lampert typically publishes a letter to shareholders. The hedge fund manager is Sears' largest shareholder and owns directly and through related entities about 59 percent of the retailer.

 

CIT and other finance companies, known in the industry as factors, provide short-term loans to manufacturers while they are waiting to be paid by those receiving their goods or services. CIT's payables represented less than 5 percent of inventories, Sears has said in the past.

 

If lenders like CIT refuse to finance Sears' suppliers, it could force the retailer to draw on its line of credit to pay for goods up front. If too many vendors seek prepayment, banks could be pressured and cut back on lines of credit for Sears, making it harder for the company to buy inventory.

 

CIT, run by Wall Street executive John Thain, had initially halted loans to Sears suppliers in early January, just weeks after the company posted dismal holiday sales numbers and said it would close as many as 120 stores.

 

It now seems like that was a temporary arrangement.

 

"People are recognizing that they don't have to be in harm's way and really go out on the limb when there is so much other business out there that they would deem to be of real quality," said one of the sources, who has learned that CIT is not writing any new business for Sears after Tuesday, January 31.

 

CIT spokesman Curt Ritter said on Monday it does not comment on specific customers. Sears declined to comment.

 

One source said that no other factoring company has changed terms for suppliers who ship to Sears.

 


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Tue, 01/31/2012 - 11:56 | Link to Comment Mr. Poon
Mr. Poon's picture

The fact of Radio Shack's continued existence never ceases to amaze me.

Tue, 01/31/2012 - 11:58 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

All box stores will cease to exist in the near future.

Tue, 01/31/2012 - 12:00 | Link to Comment Jay Gould Esq.
Jay Gould Esq.'s picture

Well, now. Shorts aweigh !

Tue, 01/31/2012 - 12:52 | Link to Comment smlbizman
smlbizman's picture

may be time to bring back sears greatest "tool" to save the day......mr. craftsmen himself....bob vilia

Tue, 01/31/2012 - 12:00 | Link to Comment TruthInSunshine
TruthInSunshine's picture

Attention Kmart/Sears shoppers: There's a blue light special on our stock, and Eddie Lampert is autographing all purchases for the next 30 minutes.

Tue, 01/31/2012 - 12:07 | Link to Comment Don Birnam
Don Birnam's picture

"I'll take 'Wall Street Grifters' for $1000, Alex."

"Very well. Here is your 'Jeopardy!' answer, for a thousand: 'The current CEO of CIT Group.' "

"Hmm. Who is 'John Thain ?' "

"Yes ! You have a thousand !"

Tue, 01/31/2012 - 14:18 | Link to Comment Ruffcut
Ruffcut's picture

Their plight is alarming, like most reality checks. But those who trade may have gotten hammered shorting this shitfart from 28 to 51 ashare on the way,back up.

The options are as expensive or worse than American HOme mortgag back in 2007. I've traded options  for years, did well on circuit shity( who deserve their death) and SHLD options are too expensive here to make very much coin. Unless, they went BK, with strike prices  at lower levels, are not available.

no lotto tickets here, bitchezz.

Tue, 01/31/2012 - 11:56 | Link to Comment Irish66
Irish66's picture

I predict JcPenny and Sears will combine

Tue, 01/31/2012 - 12:04 | Link to Comment TruthInSunshine
TruthInSunshine's picture

That would rival the worst retail mergers in history.

Why would JCP want SHLD's debt load?

Why would JCP want more locations and large ones at that?

JC Penny had better worry about its own epic problems.

 

Harry Davidowitz has nailed retail calls for the better part of the last 6 years now, and is the best retail analyst, period.

He said dollar stores would be the fastest growing retail segment, being the place where the increasingly downsized middle class would shop, and that segment is now on track towards 80 billion per year in sales.

Brick & Mortar Retail is in the midst of a slaughterhouse culling that has years to go.

Tue, 01/31/2012 - 12:06 | Link to Comment Irish66
Irish66's picture

I didn't base this on logical thinking, just gut instincts.

Tue, 01/31/2012 - 12:12 | Link to Comment TruthInSunshine
TruthInSunshine's picture

So you employed the 'best of Wall Street analysis' in coming to a conclusion that combining two shitty assets both having eroding business models increases their aggregate value in the form of a newly created single entity?

There's a career waiting for you at Merrill Lynch or JP Marlin.

Tue, 01/31/2012 - 12:18 | Link to Comment Irish66
Irish66's picture

correct..Wow, that was fun. Thanks for the playing.

 

Tue, 01/31/2012 - 12:22 | Link to Comment NotApplicable
NotApplicable's picture

Didn't stop them from picking up K-Mart.

Tue, 01/31/2012 - 12:51 | Link to Comment TruthInSunshine
TruthInSunshine's picture

That was an Eddie Lampert-inspired moment of brilliance because Eddie just knew...just knew...that the dirt underneath Kmart stores would just explode higher in value forever.

But you knew that I knew that you knew that.

Tue, 01/31/2012 - 13:51 | Link to Comment Shizzmoney
Shizzmoney's picture

Davidowitz in that Bloomberg interview was pretty good.  He pretty much confirmed the coming commerical real estate crunch that Gerald Celente touted a few years back, and also painted a picture of the retail sector that will define our economic landscape:

All will be left will be coglomorated big box dollar stores, and luxury shoppes.  Just like how there will be poor people and rich people, but no more "comfortable" middle class.

Tue, 01/31/2012 - 22:58 | Link to Comment Melville1977
Melville1977's picture

Reggie Middleton also did a post about commercial real estate imploding too. At this point, I dare not question Celente. The one 2012 trend that had knocked me out of my seat was Secession Obsession.

Tue, 01/31/2012 - 17:23 | Link to Comment Freddie
Freddie's picture

JCP sucks but it is really not much worse that that sh*t head Democrat Herb Kohl's Kohl's Dept Stores.   Kohl's is a joke and expensive as hell.   JCP may survive but Eddie bagels Lampert's Sears will not make it.

Tue, 01/31/2012 - 11:57 | Link to Comment MillionDollarBonus_
MillionDollarBonus_'s picture

PURE MANIPULATION

Tue, 01/31/2012 - 11:59 | Link to Comment Mr Lennon Hendrix
Mr Lennon Hendrix's picture

Yes.  That's right.  The PWG came in, bought the low, and they are going to sell the top.  They are the world's best hedge fund afterall.  How could it not be with the level of insider info it has?

Tue, 01/31/2012 - 12:07 | Link to Comment prains
prains's picture

MillionDGoober isn't that what you want?, professional manipulation by the Oh so smart price setters?

Tue, 01/31/2012 - 12:15 | Link to Comment Dr. Engali
Dr. Engali's picture

Hey don't pick on our resident troll. Robo hasn't been around so we need MDB for a good chuckle.

Tue, 01/31/2012 - 11:57 | Link to Comment slyhill
slyhill's picture

Love the 50% off Sears Tools Deal ads on this page. Will click-through.

Tue, 01/31/2012 - 11:57 | Link to Comment Cognitive Dissonance
Cognitive Dissonance's picture

Ouch.

Glad I bought my winter underwear during the Jan sale. :)

Tue, 01/31/2012 - 11:59 | Link to Comment Dr. Engali
Dr. Engali's picture

I hope they fit. I doubt you'll be getting a refund. I think the Eddy Lambert might be crapping his right about now.

Tue, 01/31/2012 - 11:57 | Link to Comment Dr. Engali
Dr. Engali's picture

Ah SHLD another Cramer favorite biting the dust.

Tue, 01/31/2012 - 12:24 | Link to Comment Spitzer
Spitzer's picture

Is his buddy Jon Thain that faggot still working at CIT?

Tue, 01/31/2012 - 12:00 | Link to Comment HD
HD's picture

Another American icon gone to hell...

Tue, 01/31/2012 - 12:01 | Link to Comment Offtheradar
Offtheradar's picture

Sears tools, guaranteed for life. Or until bankruptcy. 

Tue, 01/31/2012 - 12:02 | Link to Comment lolmao500
lolmao500's picture

False flags we can believe in :

http://www.washingtonpost.com/world/national-security/iran-is-prepared-t...

U.S. intelligence agencies believe that Iran is prepared to launch terrorist attacks inside the United States in response to perceived threats from America and its allies, the U.S. spy chief said Tuesday.

Director of National Intelligence James Clapper said in prepared testimony that an alleged Iranian plot to assassinate the Saudi ambassador in Washington that was uncovered last year reflects an aggressive new willingness within the upper ranks of the Islamist republic to authorize attacks against the United States.

Tue, 01/31/2012 - 12:22 | Link to Comment lolmao500
lolmao500's picture

Remember that the US government has been killing and bombing stuff in Iran for the last 5 years and somehow, these people Washington are surprised that Iran wants some payback.

http://www.telegraph.co.uk/news/worldnews/1552784/Bush-sanctions-black-o...

Tue, 01/31/2012 - 12:23 | Link to Comment NotApplicable
NotApplicable's picture

Well, all of that CIA drug money has to go somewhere.

Tue, 01/31/2012 - 12:23 | Link to Comment NotApplicable
NotApplicable's picture

Hold me Janet! I'm skeered!

Tue, 01/31/2012 - 13:46 | Link to Comment ProtectiveFather
ProtectiveFather's picture

I don't get it. SHLD is the victim of an Iranian plot? Or CIT:SHLD::Iran:USA?

 

Did you know "lol-mao" sounds a lot like the Cantonese word for "non sequitur"?

Tue, 01/31/2012 - 15:52 | Link to Comment Freddie
Freddie's picture

Attacks in the USA?  LOL!  We have the populace where probably 35% of homes have at least one AR-15, plenty of ammo, beans and are looking to give Allah a little payback.   F**king bring it.  

The bigger threat is govt unionized workers bankrupting the country.

Tue, 01/31/2012 - 12:05 | Link to Comment lynnybee
lynnybee's picture

Sears just needs to go away.   WHO!shops @Sears ?    it is the most boring place to shop, other than Kohls.    Penny's, Sears, Kohls .... their day is over.     

Tue, 01/31/2012 - 18:52 | Link to Comment Buckaroo Banzai
Buckaroo Banzai's picture

Actually, I find Sears to be a very good place to shop for appliances and tools. They've got those two segments nailed.

Tue, 01/31/2012 - 12:07 | Link to Comment Robot Traders Mom
Robot Traders Mom's picture

They are now approaching GMAC numbers, circa 2008. Maybe they can just change their name and get a few bucks from the government...

Tue, 01/31/2012 - 13:47 | Link to Comment ProtectiveFather
ProtectiveFather's picture

Good point. Sears will be deemed "Too Americana to Fail."

Tue, 01/31/2012 - 12:08 | Link to Comment Kaiser Sousa
Kaiser Sousa's picture

paging Cheryl Tiggs please.....

gonna miss those lawn mowers....

Tue, 01/31/2012 - 12:14 | Link to Comment Stoploss
Stoploss's picture

SAVE CRAFTSMAN TOOLS FOR FUCK SAKES!!!!!

Tue, 01/31/2012 - 12:25 | Link to Comment NotApplicable
NotApplicable's picture

They've already been franchised. Ace Hardware carries them locally in my neck of the woods.

Tue, 01/31/2012 - 12:19 | Link to Comment eric89074
eric89074's picture

My dad bought an Samsung LCD from Sears three years ago and got the extended warranty for an extra $150.00. He got the click of death a year after the warranty was up so he called Sears and they sent their tech guy to look at it and after throwing some parts at it he determined the panel was bad and he'd need a new TV. Sears gives him a credit for the purchase price and he gets his TV and they say they'll send someone to pick up the old one. Six months pass and still no one has come to get the broken TV and it's sitting in his garage. I do some research on the project and it's a problem with a cheap fix. After $20.00 in parts from Fry's Electronics I have it working like new and now my dad has two TVs. Thank you Sears. 

Tue, 01/31/2012 - 13:54 | Link to Comment Shizzmoney
Shizzmoney's picture

Great story!  Awesome for your dad!  This is why the corporations are trying to curb "Fair Use" laws in ACTA/SOPA/PIPA/etc because they know that as people become more tech/handy saavy, they'll resolves problem on theirown instead of outsourcing (and paying) for fixing shit (on their terms).

There is a reason why it is very hard to debug and root your Android/iPod's USB.

Tue, 01/31/2012 - 15:47 | Link to Comment Freddie
Freddie's picture

Retard serfs watch TV and enpower and enable the overlords like the Democrats muslim.  Keep watching TV sheep.

Tue, 01/31/2012 - 12:20 | Link to Comment orangedrinkandchips
orangedrinkandchips's picture

whoo-hoo...

 

YOU KNOW those cocksucking fagggots at SHLD, namely the ceo Eddie "fuck your mother" lambert will squeeze the shorts as he tries to fuck with traders.....Have to admit I like crapsman tools and lawnmower, but jeez, what part is craftsman besides the name on the hood? Not their engine.

 

Eddie needs to go down.....

Tue, 01/31/2012 - 12:28 | Link to Comment ttown
ttown's picture

AZO is EDDIES next fraud about to be exposed for the ponzi that it is!

Tue, 01/31/2012 - 17:11 | Link to Comment Freddie
Freddie's picture

+100

Eddie lampert's scams.  What is the deal with Bruce Berkowitz Fairholme Fund owning all this Lampert and TBTF sh*t stocks?

 

Tue, 01/31/2012 - 12:55 | Link to Comment Sofa King
Sofa King's picture

You know it's bad when they try to bring in the sword swallower and familiy to save the operation.

 

http://www.nydailynews.com/entertainment/keeping-kim-kardashian-gallery-...

Tue, 01/31/2012 - 12:57 | Link to Comment junkyardjack
junkyardjack's picture

Selling shares is unAmerican

Tue, 01/31/2012 - 14:08 | Link to Comment pasttense
pasttense's picture

"The hedge fund manager is Sears' largest shareholder and owns directly and through related entities about 59 percent of the retailer."

Since the stock is so cheap and they already own 59% of it, why don't they take it private?

 

Tue, 01/31/2012 - 22:56 | Link to Comment Melville1977
Melville1977's picture

I suspect Sears/Kmart is heading down bankruptcy lane or liquidation lane (e.g. Circuit City). Either way, it will mean layoffs and store closures. I do watch Davidowitz on Yahoo Ticker, he had low expectations for the takeover of JCPenney and did cite dollar stores are on the rise. How can dollar stores not be on the rise in a declining U.S. economy.

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