That big whiffing sound you heard was Sears Holdings'
It really shouldn't come as much of a surprise to investors. Sears hasn't had a single quarter of rising same-store sales in years, and this quarter was more of the same: Comps fell 5% at Kmart and were down 4.2% at Sears.
The tricks Chairman Edward Lampert has employed in the past are not working for him anymore. His total return swap maneuvers -- investment strategies that require parties to pay each other based on an asset's appreciation (or depreciation), with a payment rate predetermined by some formula -- has lost $14 million so far this year. That's a far cry from the $100 million or so he earned last year in the same time period from such hedge fund tactics.
In reality, despite Lampert's protestations to the contrary, Sears has been a survivor based upon his financial expertise and ability to auction off its real estate holdings. (It seemingly has little to do with the company as a retail operation.) And even that is questionable as the quarter's interest and investment losses of $30 million bring the total for the year to $112 million.
With Sears set to lose Martha Stewart
Sears CEO Alwyn Lewis admits that although almost all of retail is reeling from the macro environment, it can't be fully blamed for Sears' dismal performance. It takes a little more than that to account for a 99% drop in profits. Still, it is true that rivals Target
Looking at how his investments in AutoZone
Perhaps it's easy to criticize when times are tough, but maybe the discounter needs to focus once again on retailing, and stop trying to be a hip hedge fund delving into financial arcana. At the rate Lampert is going, Sears is about to emulate the Mighty Casey and strike out.
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Fool contributor Rich Duprey owns shares of Wal-Mart, but does not have a financial position in any of the other stocks mentioned in this article. You can see his holdings here. The Motley Fool has a disclosure policy.