Shares of Sears Holdings (SHLD) dropped yesterday after the once-proud retailer announced that it would look to sell its stake in Sears Canada. Credit Suisse analysts Gary Balter and Andrew Kinder don’t think much of the planned spinoff:
Associated Press We find the timing of this spin-off interesting, as Sears Canada last year sold seven of its trophy properties, but arranged to continue to operate them through the beginning of 2014. We wonder how much of the significantly diminished Adjusted EBITDA last year came from those seven properties…
[Sears Canada is also] seeing or about to see a wave of fresh competition from Wal-Mart Stores (WMT) and Target’s (TGT) recent northern expansions to Nordstrom’s (JWN) upcoming launch. The company still operates 24.8 million square feet of retail space, but only 14 full-line department stores are company-owned and as we mentioned above, much of the best real estate has been sold. Yes, Sears Canada has a net cash position, but we expect Sears Holdings to take as much cash as they can beforehand in the event of any sale or spin-off.
Shares of Sears Holdings have dropped 2.8% to $39.58 at 10:25 a.m., while Wal-Mart has fallen 1.7% to $77.41, Target has declined 1.6% to $58.31 and Nordstrom is off 0.9% at $61.32.
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