Hmm: TYFSAK no more? 22 comments
Moody's analysts say Sears and Kmart don't have enough money — or access to money — to stay in business.
In a note published Wednesday, the analysts downgraded Sears' liquidity rating, saying the company is bleeding cash and will have to continue to rely on outside funding or the sale of assets, such as real estate, to sustain operations.
22 Responses to 'Hmm: TYFSAK no more?'
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Andrew
17 Sep 16 at 9:36 pm
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It is time for Sears Holdings to fold a banner, Sears or Kmart. If I were to choose the strongest banner to keep, it would be Sears. Bye, Kmart!
Knight
18 Sep 16 at 12:48 am
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There was an article posted yesterday about another round of Kmart closings coming in mid-December. No more in SC, yet. Merry Christmas!!!!
Cullman, Alabama
Gardendale, Alabama
Craig, Colorado
Tinley Park, Illinois
Lafayette, Indiana
Pikeville, Kentucky
Great Barrington, Massachusetts
Greenville, Michigan
Manistee, Michigan
Fenton, Michigan
Byron Township, Michigan
Grand Rapids, Michigan (Plainfield Township)
Natchez, Mississippi
Scottsbluff, Nebraska
Binghamton, New York
Mattydale, New York
Burlington, North Carolina
Canton, Ohio
Oak Ridge, Tennessee
Nashville, Tennessee
Smyrna, Tennessee
Clarkesville, Tennessee
Hixson, Tennessee
Memphis, Tennessee
Abilene, Texas
West Valley City, Utah
Wytheville, Virginia
Martinsville, Virginia
Cody, WyomingHomer
18 Sep 16 at 11:09 pm
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This would be the SECOND time Kmart liquidated in the middle of the Christmas Holiday shopping season which can't bode well (watch for some S&P type of indexes to downgrade their rating of Sears Holdings, Inc.)
At one point I read that Orangeburg's Kmart was closing but when I check Kmart's store locator it's still there when they tend to delist stores once the liquidation is underway.
At this point, the only ones left to us midlands folks besides the questionable Orangeburg location are in West Columbia, Lexington and Sumter. I really hated to see Camden's go this summer. I would have picked Sumter's first (seemed dingy riding by it when I went there to visit an aunt I have that lives there) but apparently Camden's had to go....
Andrew
19 Sep 16 at 12:37 am
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At this point, Sears/Kmart going out of business would be a mercy killing. The Sears acquisition would likely replace Time Warner's AOL buy as the worst M&A move in corporate history if either Sears or Kmart had had anything more than nostalgic value before they combined into some sort of hideous Failure Voltron. It would appear that the only reason the company has lasted this long is its CEO, who engineered the acquisition in the first place, keeps dumping hundreds of millions of dollars into it from the hedge fund he manages. Otherwise, their most recent 10K (and the last 10Q) looks like Omaha Beach. Their most valuable assets are their in-store merchandise, which is WAY overvalued (when is anything at Sears and Kmart not on sale?) and their trade names, which seems to be where the only real revenue lies. Spinning or selling off Craftsman, Kenmore, Diehard, and their Home Services divisions, which together have an assumed value of almost $2bn, which is still less than the current debt load, and doesn't include other future obligations like employee benefits, lease/rent, and whatnot. Combined with the $1.1bn loss last year ($395mm last quarter) and plummeting revenues, it looks like the optimal number of stores to close is "all of them".
Jason
19 Sep 16 at 10:07 am
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*Spinning off...$2bn, looks like the only way to wring any more blood from this stone, and that $2bn is still less than...
Jason
19 Sep 16 at 10:09 am
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@jason Ed Lampert is THE reason Sears is dying, not the reason it is still afloat. Hedge funds don't give a shit about anything, but making money. Kmart is useless, but the Sears brands of Craftsman, Kenmore, and Diehard definitely have value.
They shouldn't spin it off, they should focus solely on those brands in the stores. Do away with the clothing, the jewelry. Land's End was a horrible buy, and was probably the first cement shoe. I say shrink the footprint, the overhead, etc. The real estate and leases are crushing them.
I buy all of my appliances, outdoor machinery, and tools from there. I will continue until they cease to exist. Period.palmettoconnection
19 Sep 16 at 10:57 am
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He's certainly killed it, but it's pretty much only his money that's kept it afloat for as long as it has been. It's certainly not out of the kindness of his heart, though. The loans are structured such that his fund still gets paid first (at higher-than-average interest rates) in the event of a liquidation, which at this point seems more a matter of "when" than "if" and spinning off some or all of their remaining big-name assets is likely to be one of the prime conditions of any bankruptcy proceedings.
Kenmore and Craftsman are just badges anyway, with a given product being manufactured by lord knows who (and lord knows where, although increasingly the answer is Asia, on the same lines their competitors are made on) and apart from Kenmore's being sold exclusively at Sears and Kmart, there's really no advantage for SHLD keeping either brand other than they're the only valuable assets the company has at this point.
I know they're trying to refocus both Sears and Kmart as membership-driven ecommerce outlets, which you might think sounds a lot like Amazon Prime, and if you do that's because it is. Trying to out-Amazon Amazon at this late date, and betting the future of your company on it, is going to end badly. But hey, what does Lampert care? He's going to get paid either way.
Jason
19 Sep 16 at 5:16 pm
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The last time I looked at a Craftsman riding lawn mower it looked like one built by MTD, just like every Bolens, Troy-Bilt, Cub Cadet, etc. mower out there in the market. I know Sears has always used other companies to make their products, but never have I seen one that was such a carbon copy.
Homer
19 Sep 16 at 5:37 pm
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BTW - I just saw where MTD does build the vast majority of the riding mowers with a very small percentage by made by Husqvarna.
Homer
19 Sep 16 at 5:38 pm
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I remember reading that Sears had an agreement with one of the big appliance makers, Maytag or Whirlpool maybe dating back dacades that new features would show up in Kenmore labelled models first then in the manufacturer tagged products. So yes, you were getting the same assembly line for both, but the Kenmore was actually a little more advanced.
Then Lampert decided the arrangement had no value and let it lapse.
ted
19 Sep 16 at 11:33 pm
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Regarding the Kenmore appliances, they were at one time manufactured by Maytag, which is why they were the best in the industry. My understanding from a recent appliance service on my Kenmore refrigerator was that the agreement lapsed because it was too costly and the company needed to make cuts. Kenmore appliances are now manufactured by LG according to the repair technician and he advised me to stay away from them because LG and Samsung are the worst made appliances in the industry. The tech worked for Sloan's appliance. Sloan's only repairs appliances and does not sell them, so there was no ulterior motive for him to advise against those brands other than his experience in repairing them.
James R
20 Sep 16 at 12:11 am
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I can attest to the fact that Samsung is a terrible appliance maker. I have their french door fridge with 2 bottom drawers. Over 29 cubic feet. A piece on the door broke off less than 2 years after having it. And now the ice maker doesn't work properly.
Sidney
20 Sep 16 at 8:56 am
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Kenmore is made by everyone. Although, nowadays, "everyone" is basically Electrolux, Whirlpool, and a couple of other companies. Even GE appliances aren't GE anymore, they're owned by Haier, out of China.
No complaints out of my LG kitchen or Samsung washer/dryer, and they've all been in service for years and years. My only regret with the (builder-grade) Kenmore appliances that came with the house is that they weren't flammable, or I'd have happily held a bonfire for each and every one of them in my driveway, along with everyone from Sears' Home Services division that were so very bad at every level of customer service.
Jason
20 Sep 16 at 10:58 am
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My folks had an LG refrigerator and it lasted less than 3 weeks in our house because it kept having issues so we now have a Maytag that has worked well (and have had it since). If Kenmore is made my LG that means that Kenmore is off our list as well.
I picked out a Samsung stove for an aunt & uncle of mine about a year ago when we were doing some renovations on their house and the aforementioned aunt has enjoyed the heck out of it.
Andrew
20 Sep 16 at 12:15 pm
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And this morning, an announcement that Sears is selling the Craftsman brand to Stanley, for $900M. Kenmore is supposedly on the market as well, and all this is looking like a late-stage game of Jenga.
Jason
5 Jan 17 at 8:28 am
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Stanley has been on a roll. After acquiring Black & Decker a few years ago they bought Newell Tools last year. Remember the Newell Tool trucks that sold mechanic's quality tools to service stations? And now Craftsman. Pretty impressive, and I think K Mart/Sears just got screwed for accepting what seems to be a low ball offer. I have owned and used equipment from all these manufacturers over the years and it has all been tough stuff.
Joe Shlabotnik
5 Jan 17 at 11:41 am
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Interesting Sears article from Bloomberg last month:
Listening to a Sears earnings call in 2016 is like realizing that the twinkling light you're admiring in the night sky is from a star that died 50 years ago.
t's looking increasingly likely that Sears is going to lose the race to close stores before the cost of running them chokes the company to death -- or that if somehow it does manage to close stores faster than it loses money, it will eventually discover that the equilibrium number of Sears locations is zero.
ted
5 Jan 17 at 11:55 am
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Looks like Stanley is making out like a bandit. I have a Craftsman table saw that my Dad bought back in the early 60's and it still cuts like a knife through butter. I also have an old Dunlap (cheaper Sears brand) scroll say from the 50's that still runs like a charm. They sold some great equipment in the day.
Homer
5 Jan 17 at 5:46 pm
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I have a Stanley thermos that has been well used for decades and it still keeps coffee steaming hot for hours. Their tape measures continue to work as do their collapsible saw horses.
If you have been a shareholder over the years ....congratulations.
Joe Shlabotnik
5 Jan 17 at 8:31 pm
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Fast Eddie Lampert betrayed his own brand. What a d***hole! Selling Craftsman is basically selling Sears. The final nail is when the Kenmore name is sold. Good luck on that lifetime warranty on tools now. I am a Die Hard Sears loyalist (get it), and I absolutely hate to see this happen.
I think the original saying was Baseball, Apple Pie, Chevrolet, & Sears. #ripcraftsman
The turnaround strategy was all wrong for longevity. They should have doubled down investment in the major brands including Craftsman, Die Hard, Kenmore, the parts dept, and automotive centers while eliminating clothes (sorry, Tough Skins) jewelry, bedding, etc.
Shrink the mall footprint, and open more tailored rural, suburban, and urban stores.palmettoconnection
9 Jan 17 at 10:18 am
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Oh, Lampert's moves were completely on-brand. His brand was never Sears, is the thing. And I see no reason to think that turnaround was ever his goal. Wringing that last drop of blood from the turnip was, and is, the driving force behind every move he's made at the helm of SHLD.
Jason
11 Jan 17 at 11:04 am
As much as I'd hate to see Kmart go...I'm afraid this isn't a big surprise...it seems like every time you turn around they're announcing rounds of store closures and if it keeps going the way it is, they're going to go the way of Service Merchandise, Circuit City*, S&K Menswear, Hancock Fabrics, Anna's Linens, etc.
* someone here cited issues with the way Circuit City was leveraged as one of the things that did them in...