SHLD Archive

0

Lampert Chops Down Stake In Orchard Supply Hardware As Stock Marches Steadily Downward

By
Inelegant Investor
– March 31, 2013Posted in: Stock Spinoffs

Last January, Sears Holdings(SHLD), controlled by Eddie Lampert, spun off Orchard Supply Hardware(OSH). At the time, we were bullish on Orchard. We were wrong. Unfortunately, while the stock has plummeted, we held onto our small stake.  Lampert, however has been smarter, as he has cut his stake in half over the past year.  Orchard has struggled to maintain or grow sales despite pouring money into store remodelings. Profitability has remained elusive and the cash burn is bringing the company dangerously towards the liquidity precipice. Orchard was never a business Lampert wanted to be in; he’d tried to sell it off unsuccessfully several years prior to the spin. There is still the mystery of the preferred stock, but it would probably be best to follow Lampert’s lead, and leave the orchard. Disclosure: The author, unfortunately holds shares of OSH and OSHSP Related articles Pizarro: Orchard Supply Hardware planning improvement project on old San Jose store (mercurynews.com) Sears jumps after Lampert adds to stake (marketwatch.com)

The post Lampert Chops Down Stake In Orchard Supply Hardware As Stock Marches Steadily Downward appeared first on Stock Spinoffs.

Tags: , , , , , , ,
0

Sears Hometown And Outlets – The Brighter Side Of Sears?

By
Inelegant Investor
– December 6, 2012Posted in: Stock Spinoffs

It’s an old story – when will Edward S. Lampert, genius hedge fund manager, finally figure out how to create value out of the cobbled together pile of assets known as Sears Holdings (SHLD)? Recently, Lampert has gone from lackadaisical to peripatetic, spinning off Orchard Supply (OSH), Sears Hometown And Outlets (SHOS), and part of [...]

The post Sears Hometown And Outlets – The Brighter Side Of Sears? appeared first on Stock Spinoffs.

Tags: , , , , , , , , , , ,
0

Sears Holdings Centrifuge Spins North To Canada

By
Inelegant Investor
– November 15, 2012Posted in: Stock Spinoffs

Shareholders of Sears Holdings(SHLD) have been once again reminded that entropy is inexorably increasing, at least in their brokerage accounts. Less than  a year ago they had only Sears, but since then, they have received in three separate transactions, Orchard Supply Hardware common (OSH) and preferred (OSHSP), warrants to buy Sears Hometown and Outlets (SHOS), [...]

The post Sears Holdings Centrifuge Spins North To Canada appeared first on Stock Spinoffs.

Tags: , , , , , , , , , , , ,
0

Sears Rights Offering Distribution Is Set For Today

By
Spin Doctor
– September 11, 2012Posted in: Stock Spinoffs

The next round of corporate action at Sears Holding (SHLD) is about to begin as the board of directors set today as the distribution date of the rights offerings to purchase shares of its Hometown & Outlet store spinoff. The new company is expected to trade under the ticker ‘SHOS’ and each SHLD shareholder will receive one rights [...]

The post Sears Rights Offering Distribution Is Set For Today appeared first on Stock Spinoffs.

Tags: , , , , , , , , , , , , , , ,
0

Orchard Supply Hardware Struggles To Show Sales Growth, Sells Off More Real Estate

By
Inelegant Investor
– August 2, 2012Posted in: Stock Spinoffs

It’s been a few quarters since Orchard Supply Hardware(OSH) was spun off from Sears Holdings(SHLD).  The stock continues to trade at similar levels to where we felt it was a reasonable buy soon after its spinoff. Yesterday, the company issued a brief press release which contained three critical pieces of information.

Comparable Store Sales were up 0.9% – kind of:  The company “reported an increase in comparable store sales(1) for the second quarter ended July 28, 2012 of 0.9%. Preliminary net sales were $194.0 million compared to $196.4 million in the second quarter of fiscal 2011.”  Wait! What’s that little ’1′ next to comparable store sales. Oh, a footnote! Let’s see what it says.

Comparable store sales are calculated using sales of stores open at least twelve months and exclude E-commerce. Additionally, and because of an agreement the Company entered into with Sears Holdings Corporation on October 26, 2011 whereby the Company now sells appliances on a consignment basis and receives commission income for sales of such appliances and related protection agreements, comparable store sales also exclude approximately $4.5 million of net sales of Sears branded appliances in the second quarter of fiscal 2011 and approximately $0.5 million of commission income in the second quarter of fiscal 2012.

There we go. Excludes internet sales and appliance sales. It’s good that the company was able to reverse the trend of sales declines by adjusting the bar a bit, but what else did they have to do to show this very modest improvement?

Margins were compressed in the second quarter: Oh, here we are. CEO Mark Baker tells us how he grew comp store sales that paltry 0.9%, “the environment remains challenging and our business was more promotional than anticipated, which will likely impact margins in the second quarter.” No word on how big the margin impact is, but don’t expect record earnings this quarter.

More real estate sales: Buried deep in the press release the company shares the most material piece.  They have sold six store properties to a REIT and leased them back, in a deal that closed on July 27. They received $43 million for these, plus the new landlord has given an undisclosed amount of allowances for improving the properties. $33 million of the proceeds have been used to pay down other debt and the company did not say what will be done with the remaining $10 million. Orchard has been a serial seller of real estate, but the amount of monetizable real estate is dwindling. Going forward the company will have to create positive cash flow from its operating business – something it has not yet demonstrated it can do consistently.

We continue to hold this stock, but are increasingly dissatisfied with management’s performance.

Disclosure: The author owns shares of OSH and SHLD

The post Orchard Supply Hardware Struggles To Show Sales Growth, Sells Off More Real Estate appeared first on Stock Spinoffs.



Tags: , , , ,
0

Sears Sells Inventory And Customer Lists From Kmart’s Pharmacies To Be Closed To Walgreens

By
Inelegant Investor
– January 30, 2012Posted in: Inelegant Investor

Walgreens(WAG) announced today that it has reached an agreement to acquire prescription files and inventory from 33 Kmart pharmacies in 16 states from (SHLD).  A quick look at the locations reveals that these are the locations scheduled to be closed in the next few months. The first transition already happened 3 days ago, though has not commented nor were any terms disclosed.  hopes to raise $170 million by liquidating inventory at these stores.

Disclosure: The author holds no position in any stock mentioned.

The post Sears Sells Inventory And Customer Lists From Kmart’s Pharmacies To Be Closed To Walgreens appeared first on Inelegant Investor.



Tags: , , , , ,
0

When Sears Is All You Have- Small Towns Plead In Vain For Sears To Stay

By
Inelegant Investor
– January 30, 2012Posted in: Inelegant Investor

We have written previously about (SHLD) closing dozens of stores. Now, the Huffington Post reports on

English: Sears Hardware Store

some of the small cities and towns where Sears has announced closings that are desperate to keep their stores.

Now, at least four of the places affected — Jackson, Miss., Cleveland, Tenn., New Smyrna Beach, Fla., and Harper Woods, Mich. — are fighting the company’s decision. Local governments, afraid of the economic impact of the closures, are appealing to with petitions, rallies and even tax incentives, so far to no avail.

“We would like for a major store to remain in the Jackson area,” pleaded Mary Garner on the online petition started by Jackson Mayor Harvey Johnson Jr. “Please do not desert us.” The petition had 3,251 signatures as of Wednesday afternoon.

We’d be surprised if the company changes its decision. The stores being closed have long histories of being unprofitable, and it’s unlikely that community response can be strong enough or sustained enough to reverse that, particularly given the level of investment Sears would have to put into the stores. The company said as much in an email to the Huffington Post

“We appreciate the community support and in fact have seen an increase in traffic to these stores since the petitions have started,” Tom Aiello, a Sears spokesperson, wrote in an email. “Unfortunately these stores have lost money for several years and Sears Holdings, as a company, cannot continue to support underperforming stores.”

There was a time when having a Sears put a town on the map.  That time is long past, and the sooner these cities and towns move their focus from the past to things that can drive their future prosperity, the faster they will be able to make meaningful progress with their economic development.

Disclosure: The author holds no position in any stock mentioned

Related articles
Enhanced by Zemanta

The post When Sears Is All You Have- Small Towns Plead In Vain For Sears To Stay appeared first on Inelegant Investor.



Tags: , , ,
0

Local Paper Interviews Marc Baker, CEO of Orchard Supply Hardware

By
Inelegant Investor
– January 23, 2012Posted in: Stock Spinoffs

The Mercury News interviewed Marc Baker, CEO of Orchard Supply Hardware(OSH), which was recently spun off

DSC28613, OSH Orchard Supply Hardware, Sunnyva...

from Sears Holdings(SHLD). There’s nothing really new here, but it’s always interesting to see how a CEO views and spins his company. Some highlights:

Q Where does Orchard fall in terms of the hardware store landscape?

A We think of ourselves as a big small box rather than a small big box. The distinction is we don’t carry all the (lumber, dry wall and other commodity building materials) found in big-box stores, but we are very deep in all the repair products.

Q Do you have a person you see as your typical customer?

A We see a lot of customers, whether they are young or middle-aged, they are looking for a part they need. They have a faucet that leaks. They have a hinge that doesn’t work. They are coming here seeking answers and products.

Q What area do like to open new stores in?

A We like higher-density areas with modest homes that need repair.

Q What is the average time a worker has been with the company?

A Well over 10 years. It’s very impressive. There is a culture at Orchard that goes back. It started here in San Jose and it’s the only home center, big hardware store, that exists like it does today. And it’s because of the people. A lot of the experience, we think, is the service you get in our store, where you can want that one little item and somebody knows what that one little item is.

…

Q What was it like coming to Orchard from Home Depot?

A It’s been 10 years since I left Home Depot, but I can tell you that the cultures are not that different. They are both companies that care about the success of the business and their relationships with the customers.

FIVE facts
ABOUT MARK BAKER
1. Flies a Cessna Caravan to visit Orchard stores.
2. Owns a Harley-Davidson Road King motorcycle.
3. Does his own home repair jobs, and has built three homes from the ground up.
4. Last book: “Steve Jobs.”
5. Last movie: “Mission Impossible.”

Disclosure: Author owns shares on OSH, OSHSP and SHLD

Related articles

Local Paper Interviews Marc Baker, CEO of Orchard Supply Hardware is a post from Stock Spinoffs – Finding Value in Special Situations. All Rights Reserved.



Tags: , , , , ,
0

Tricky Tax Treatment For Orchard Supply Preferred Shares

By
Inelegant Investor
– January 17, 2012Posted in: Stock Spinoffs

We’ve written before about the puzzle of Orchard Supply Hardware Preferred(OSHSP). This preferred issue was spun off from Sears Holdings(SHLD) together with Orchard Supply Common(OSH).  While we’re still not sure how to value them, thanks to Laurie Frederiksen, COO of bivio.com for pointing out some tricky tax treatment for their distribution.

It seems that unlike most spinoffs which are tax-free- Rouse(RSE) is another recent exception – the preferred shares are subject to “Section 306″ and are treated as dividends. The fair market value of the preferred stock on the day of distribution(with some latitude here as the stock moved quite a bit) is treated as dividend income and adjusts cost basis on the preferred downward. Subsequent sales can be subject to an additional capital gain, though no losses may be taken. Investors are likely to have had some of this stock sold and received cash in lieu of fractional shares- this will trigger complex tax issues for an insignificant amount of money. Unfortunately, the IRS considers all income to be material, resulting in high overhead for small investors struggling to figure this all out.

Disclosure: Author owns OSH, SHLD and OSHSP

Related articles

Tricky Tax Treatment For Orchard Supply Preferred Shares is a post from Stock Spinoffs – Finding Value in Special Situations. All Rights Reserved.



Tags: , , , , , , , , ,
0

Eddie Lampert Doesn’t Fear Sears Bankruptcy, Personally Purchases $150 Million Worth Of Sears Stock

By
Inelegant Investor
– January 12, 2012Posted in: Inelegant Investor

It’s been a brutal year for (SHLD) and a brutal year for Eddie ’s hedge fund . ESL has recently handed over shares of (AN) to investors, presumably to cover redemptions, but it looks like Mr.

English: Sears Hawthorn Center.

Lampert is not willing to part with shares of . The WSJ reports, based on public filings, that Lampert purchased 4.46 million shares of Sears from the fund, and spent another $12 million purchasing shares on the open market.  In our opinion this is a positive sign.  That Lampert did not inject cash into the company by purchasing new shares, or by purchasing new securities senior to common equity, or by purchasing outstanding distressed debt, sends a strong message that he does not believe the company is at risk of or that it faces a liquidity crunch.

UPDATE: Redemptions were paid in AutoZone(AZO) shares, not AutoNation which ESL also owns a large stake in.
Disclosure: The author owns shares of

Related articles

Eddie Lampert Doesn’t Fear Sears Bankruptcy, Personally Purchases $150 Million Worth Of Sears Stock is a post from Inelegant Investor – Something of Value. All Rights Reserved.

Tags: , , , , , , , , , ,
Older Entries