Sears Holdings Corp (NASDAQ:SHLD)’s Struggle For Survival
Sears Holdings Corp (NASDAQ:SHLD) finally filed papers with the Securities and Exchange Commission regarding the spin off its lucrative Lands’ End clothing business. The company said, “It plans spin-off as a separate company by distributing stock to the retailer’s shareholders.” The filing has not been surprising as Sears Holdings Corp already pointed in October its consideration to separate Sears Auto Center and Lands’ End businesses from rest of the company. However, there was no mention of Sears Auto Center in Friday’s announcement.
The Struggling Retailer
The stock of Sears Holdings Corp (NASDAQ:SHLD) fell 3.8% to close at $48.09 which suggests that the stock has traded almost flat with just over 1% gain during past six months. This compares to more than 6.5% gains reported by Macy’s, Inc. (NYSE:M)’s stock and about 4.75% gains of Wal-Mart Stores, Inc. (NYSE:WMT).
It is quite evident that the entire retail industry is facing the heat along the uncertain macroeconomic environment and cautious consumer spending behavior. But Sears Holdings Corp (NASDAQ:SHLD) in particular seems to be the major victim of this unfavorable industry environment as it has closed more than 300 stores in the last three years. And despite some strategic turnaround measures the company has not been able to stabilize its same-store sales which in 3Q13 declined by 3.1% – 4% at Sears and 2.1% at Kmart.
The Missing Edge
Sears Holdings Corp (NASDAQ:SHLD) that competes with Wal-Mart Stores, Inc. (NYSE:WMT) and Macy’s, Inc. (NYSE:M) for various product lines does not seem to have any advantage in particular, except for its specialty in home appliances. Hence this lack of competitive edge except for home appliances, allows consumers to hunt for better deals and switch freely among these retailers based on convenience and economy.
Lack of size and scale makes Sears Holdings Corp (NASDAQ:SHLD) vulnerable, keeping it away from profiteering. Morningstar calculates Macy’s, Inc. (NYSE:M)’s return on invested capital (ROIC) somewhere in mid-single digits while that of Wal-Mart Stores, Inc. (NYSE:WMT) barely touching double-digits