Pale profits: On May 17, Sears actually pulled off a profitable quarter ... because the company sold some assets. In other words, Sears didn't show any signs that it remembers how to actually be a decent retailer (a very long-standing problem). Right now, it's kind of like Sears is selling its organs, which brings in money in the near term but is ultimately unsustainable.
Sears' comparable-store sales in all three of its units all decreased, and total revenue fell 2.8%. Without the asset sales, Sears generated a loss of $0.31 per share. One-time gains should fool no one into thinking Sears is really in much better shape than it was six months ago, or last year for that matter.
Retail identity crisis: It's hard to be as messed up as Sears when it comes to having little or no competitive advantage in a crowded retail landscape. J.C. Penney
The market for low-priced merchandise contains plenty of formidable (and in some cases, even desperate) competition. Target
Last but not least, Costco
Painful debt: One of the worst things about Sears is its unattractive balance sheet. It has just $777 million in cash at this point, and $3.23 billion in debt. Its total debt-to-equity ratio is 70%. Debt's particularly dangerous when a company is already on poor operational footing. Sears is expected to continue to report dwindling sales and losses for years to come.
Ask those who invested in Borders why such a situation could be a recipe for disaster.
Sears may have some assets to sell off, but lingering investors should simply sell off their Sears shares. It would take a miracle to truly turn Sears around, and miracles are in short supply these days.
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