Chillin' out till it needs to be funded
Sears holdings jumped 20% yesterday with great belife in the Hedge fund manager that bought them over. Eddie Lampert’s 69% across mart, Sears and Roebuck, is stilll strapped on as the retailer finds ways to loosen up the cash stream. A sale of 11 General Growth Properties is bringing $270 mln cash to the table which will last another quarter, while the profitable Hometown and Outlets stores are being strung up for a sale . They make for 80 mln out of 133 mln of the retailers’ profits when they make profits. That means the remaining 3000 odd stores ( starting from their known 4000) after 120 have been shut down will be the common branded and CIT supported Sears organisation.
The Sears Hometown and Outlet stores will bring in another $500 mln and those 800 stores will be free to extend supplier credit and run inventory easier after the sale.
Revenues that fell only $1.1 bln for the year were down only 1.4% for Kmart, 3% for Sears and 7.7% for Canada stores for the full year. However the losses for the full year were more than $2.7 bln down on an accounting charge of $2.7 bln and Investment in inventories across its 4000 stores shrunk to $8 bln, even as the $800 mln from the sales will add to available cash of $750 mln and the available “store credit” of $2.5 bln ( and an additional $1 bln in accordion lines)
Most of the accounting charge was booked in the 4th quarter. Management speak on the matter seemed to be, you called us riffed, so here we are spilling the beansa and so “As we were” after the news. and that means no restructuring per them is worthwhile except for this arranging for cash for the rest of 2012 probably. The hedge fund conglomerate is shutting down 120 stores after the bad results bu tone thinks likely the real restructuring would be forced on them after this cash crunch is played down by end 2012.
Sears made a $351 mln EBITDA in Q4 out of the $277 mln EBITDA for the year,. The company counts its Lands End and Sears Canada as the next unencumbered real estate. Wonder if getting to 3000 stores overall will make it more restructuring worth y and align it on the lines of Macy’s in 2009/2010? Operating income for january 2012 at $691 mlnis actually higher than January 2011. Despite a $3.1 bln margin reported for the year, Kmart margin has already shrunk 4.4% and 2.8% in Sears’ Domestic in Q4
The accounting adjustments of $2.7 bln for the year included a $1.7 bln valuation reserve in Q4 against the Deferred Tax Assets the company has built up for that day of profit. Netflix and TExtron followed in Sears’ wake to complete the Top 3 of comebacks for 2012 ( probably all without a cause)