I thought you might be interested in hearing how one of our old time
tool sellers were doing.

TMT


Sears Holdings sees big profit shortfall

By Steve Goldstein, Marke****ch
Last update: 1:15 p.m. EST Jan. 14, 2008
The previous version of this Marke****ch story incorrectly reported
that the company was halting its stock buyback program and that the
stock was trading at an all-time low, rather than a three-year low.
The story has been corrected.
NEW YORK (Marke****ch) -- Sears Holdings Corp. shares fell 6% in
midday trading Monday after the retailer warned that fourth-quarter
earnings per share may fall as much as 51% from last year's levels.
Hoffman Estates, Ill.-based Sears Holdings warned it's expecting
earnings to fall between $2.59 and $3.48 a share for the three months
ending Feb. 2, compared with last year's $5.33 a share.
Analysts polled by Thomson Financial have been expecting fourth-
quarter earnings of $4.43 a share, on average.
The stock fell $6.42 to $89.75, eclipsing its earlier 52-week low of
$90.80 a share. It's also the first time since early 2005 that the
stock has fallen below $90. Downgrades came from Credit Suisse and
Goldman Sachs, who cut the stock to sell.
The decline comes after a drop in holiday-season sales for both the
company's Sears and Kmart chains. For the nine-week period ended Jan.
5, Sears' domestic same-store sales fell by 2.8% and Kmart's same-
store sales dropped by 4.2%.
"Kmart has been crushed by Wal-Mart," said Craig Johnson, president of
consulting firm Customer Growth Partners. "It's not a well-managed
retailer."
Lower sales were seen across most product lines, with notable declines
in the Sears apparel and tools categories and the Kmart seasonal
categories. One bright spot for both Sears and Kmart was home
electronics, Sears Holdings said.
Sears has been losing sales of home appliances to Lowe's Companies
Inc., Johnson added.
"We believe that comparable-store sales results reflect increased
competition and the negative impact of unfavorable economic
conditions, such as a weak housing market and consumer credit
concerns," Sears said.
Gary Balter, analyst at Credit Suisse, said his previous buy
recommendation on Sears was based on the company's free cash flow and
asset value.
Now, "over the past few months, we believe the largest piece of that
value, real estate, has declined materially, with other pieces
including brand value also losing a substantial part of their value in
this market," Balter wrote in a note to clients.
He cut his stock price-target to $70, from $150.
Meanwhile, gross margins contracted two percentage points because of
the "highly promotional nature of this holiday selling season." The
home electronics shift also weighed on margins because Sears doesn't
make as high a profit from selling them.
Sears Holdings has the authority to buy back $223 million worth of the
company's shares under its current program.

On Mon, 14 Jan 2008 22:30:07 -0800 (PST), Too_Many_Tools
wrote:
snip
The previous version of this Marke****ch story incorrectly reported
that the company was halting its stock buyback program and that the
stock was trading at an all-time low, rather than a three-year low.
snip
When the stock price data is converted to constant value dollars
using CPI-U data and charted it is enough to make your hair stand
on end. FWIW - this applies to most all stocks and indexes.

Note that in this particular case [Sears] this "conglomerate" was
largely funded by using the K-Mart pension funds when the
bankruptcy successor corporation "K-Mart Holdings Corporation"
bought Sears, and then renamed themselves "Sears Holding
Corporation." Sears Holding Corporation transmogrified into a
hedge fund, albeit without a name change -- see Washington Post,
Risky Side of Sears: Retailer Is Recast As a Hedge Fund, As Sales
and Stores Decline, Chairman Focuses on Investment, March 11,
2007.

We are indeed "living in interesting times."