Sears Holdings Liquidation Sale
We receive got been brusk Sears Holdings, publicly, albeit inward minor quantity. Being summertime inward Commonwealth of Australia I did non fifty-fifty facial expression at the marketplace for the final dyad of days - but got into function for unopen to congratulatory emails every bit Sears stock is off really difficult on an announcement of really awful sales, the closure of 100 to 120 stores together with $1.6 to $2.4 billion of non-cash charges. (More virtually the charges later on on.)
I facial expression pretty smart putting a Sears brusk on inward Nov - together with kudos is gratefully accepted but undeserved. I was brusk Sears at my erstwhile theatre when the Eddie Lambert controlled K-Mart took them out for considerably to a greater extent than than they were worth. It was non the solely fourth dimension that happened to me - but multiple stabs don't wearisome the pain. I would gladly swap kudos for a refund of my together with then clients' money.*
The premise for owning Sears was belongings liquidation. The fellowship owned many of its sites - sometimes on mass at depression historic values reflecting the company's long together with i time glorious history. Eddie Lambert together with his merry-men were going to extract that value through selective shop closures together with super-profitable liquidation. Sears was an awful retailer (there was picayune uncertainty virtually that) but it was - they thought - a skillful belongings play.
My view: owning Sears every bit a belongings play is a demonstration of the arrogance together with breathtaking naivete of much that passes on Wall Street. Sears Holdings has over 300 thou employees. I don't know how yous successfully liquidate a occupation concern integrated alongside that many lives. I don't know of anyone who has ever successfully liquidated a occupation concern alongside that many employees.** I am non sure it tin survive done together with it for sure can't survive done past times someone alongside my skill-set (highly analytical, might to spy value or value traps but no people management science together with non much tact).
The thought that Sears was going to survive managed/liquidated past times a bunch of hedge fund guys (people similar me) good - that was comical.
Just to stress the indicate for my fund managing director friends who read accounts together with receive got my skills (but similar me are oft disconnected from the businesses they invest in) I volition nation the obvious. The employees are living breathing people together with every bit yous line the occupation concern apart the trend yous process those people together with how they hollo back virtually yous (and comport towards you) are critical to whatsoever value yous extract inward liquidation. Someone has to facial expression these people inward the oculus together with enjoin them they don't receive got a job. And someone has to pick-and-choose which people to burn downward together with which to retain. And they receive got to exercise this without destroying much of the value extracted along the way. They receive got to liquidate the theatre inward such a trend that the value accrues to the liquidators together with non to the people who are existence screwed.
I don't attention what yous hollo back of the morality of that. The reality of that is that it was ever going to survive difficult - perhaps really hard.***
We are virtually to uncovering out how hard. Sears is going to unopen 100 to 120 stores (it is vague virtually the number) together with burn downward many employees. But they receive got non worked out which employees or fifty-fifty which stores. Not to sound ghoulish - but my justice is that this is going to survive considerably harder than the "Sears spokesman" makes it sound. And if they can't exercise 120 stores without problem together with then the master Sears liquidation premise was insane. This is a illustration of Wall Street fantasy coming together reality: eventually reality wins.
The charges together with reality
The large (non-cash!) charges deserve mention. This is from the Sears release:
The reality is unchanged: when yous hollo back of the 1950s yous hollo back of Sears. Sears was (in Main Street reality) irrelevant a decade ago. The Wall Street fantasy took a picayune longer to end.
John
*(A annotation virtually Schadenfreude.) The take-over of the erstwhile Sears past times the Eddie Lambert controlled K-Mart was the minute worst twenty-four hr catamenia of my career. The worst twenty-four hr catamenia was when Fred Goodwin's Royal Bank of Scotland purchased Charter One Financial. When I started the weblog i of the primary goals was to spell out but how atrocious Sir Fred Goodwin (the together with then CEO of Royal Bank of Scotland) was. The fourth post on this blog was the get-go of my "Sir Fred Goodwin decease watch". I enjoyed watching him together with his banking concern come upward apart. But I should non receive got enjoyed it. Schadenfreude is non an attractive personality feature together with the collapse of RBS has caused existent hurting to a lot of innocent parties. And a Schadenfreudegasm - good that but strikes me every bit unreasonably indulgent. After all my clients lost coin - together with I should together with would but cannot swap whatsoever pleasance I had for a refund of their losses.
This fourth dimension though I am but accepting the Schadenfreude. My customer are making coin together with I receive got no argue to experience guilty virtually that. Moreover I don't receive got to burn downward those employees. Unlike Royal Bank of Scotland (which Sir Fred destroyed) Sears employees were doomed anyway.
**. It is worth mentioning the GM example. GM was salvaged through bankruptcy alongside a dyad of hundred thou employees. But those employees were specially trapped, the shareholders were wiped out together with the Government contributed considerable money. That is what a "successful" transition for a occupation concern alongside that many employees looks like.
***. (Politics, employees together with realism). I am a haemorrhage marrow left-winger together with naturally experience a picayune paternalistic to the employees existence fired. However yous don't need to survive a haemorrhage marrow lefty to grip alongside my analysis. H5N1 realist volition enjoin that when yous receive got 300 thou employees your relation to them is going to survive critical inward running your business. Employees are "stakeholders" fifty-fifty if your solely (moral) criteria is "shareholder value". Realism over politics is a amend ground for investment.
I facial expression pretty smart putting a Sears brusk on inward Nov - together with kudos is gratefully accepted but undeserved. I was brusk Sears at my erstwhile theatre when the Eddie Lambert controlled K-Mart took them out for considerably to a greater extent than than they were worth. It was non the solely fourth dimension that happened to me - but multiple stabs don't wearisome the pain. I would gladly swap kudos for a refund of my together with then clients' money.*
The premise for owning Sears was belongings liquidation. The fellowship owned many of its sites - sometimes on mass at depression historic values reflecting the company's long together with i time glorious history. Eddie Lambert together with his merry-men were going to extract that value through selective shop closures together with super-profitable liquidation. Sears was an awful retailer (there was picayune uncertainty virtually that) but it was - they thought - a skillful belongings play.
My view: owning Sears every bit a belongings play is a demonstration of the arrogance together with breathtaking naivete of much that passes on Wall Street. Sears Holdings has over 300 thou employees. I don't know how yous successfully liquidate a occupation concern integrated alongside that many lives. I don't know of anyone who has ever successfully liquidated a occupation concern alongside that many employees.** I am non sure it tin survive done together with it for sure can't survive done past times someone alongside my skill-set (highly analytical, might to spy value or value traps but no people management science together with non much tact).
The thought that Sears was going to survive managed/liquidated past times a bunch of hedge fund guys (people similar me) good - that was comical.
Just to stress the indicate for my fund managing director friends who read accounts together with receive got my skills (but similar me are oft disconnected from the businesses they invest in) I volition nation the obvious. The employees are living breathing people together with every bit yous line the occupation concern apart the trend yous process those people together with how they hollo back virtually yous (and comport towards you) are critical to whatsoever value yous extract inward liquidation. Someone has to facial expression these people inward the oculus together with enjoin them they don't receive got a job. And someone has to pick-and-choose which people to burn downward together with which to retain. And they receive got to exercise this without destroying much of the value extracted along the way. They receive got to liquidate the theatre inward such a trend that the value accrues to the liquidators together with non to the people who are existence screwed.
I don't attention what yous hollo back of the morality of that. The reality of that is that it was ever going to survive difficult - perhaps really hard.***
We are virtually to uncovering out how hard. Sears is going to unopen 100 to 120 stores (it is vague virtually the number) together with burn downward many employees. But they receive got non worked out which employees or fifty-fifty which stores. Not to sound ghoulish - but my justice is that this is going to survive considerably harder than the "Sears spokesman" makes it sound. And if they can't exercise 120 stores without problem together with then the master Sears liquidation premise was insane. This is a illustration of Wall Street fantasy coming together reality: eventually reality wins.
The charges together with reality
The large (non-cash!) charges deserve mention. This is from the Sears release:
[We Sears] await that nosotros volition tape inward the quaternary quarter a non-cash accuse related to a valuation allowance on sure deferred revenue enhancement assets of $1.6 to $1.8 billionYou know what that means. It agency that yous should non await to earn that net turn a profit inward the future. It is the admission from the Eddie Lambert controlled Sears that the fantasy is over.
The reality is unchanged: when yous hollo back of the 1950s yous hollo back of Sears. Sears was (in Main Street reality) irrelevant a decade ago. The Wall Street fantasy took a picayune longer to end.
John
*(A annotation virtually Schadenfreude.) The take-over of the erstwhile Sears past times the Eddie Lambert controlled K-Mart was the minute worst twenty-four hr catamenia of my career. The worst twenty-four hr catamenia was when Fred Goodwin's Royal Bank of Scotland purchased Charter One Financial. When I started the weblog i of the primary goals was to spell out but how atrocious Sir Fred Goodwin (the together with then CEO of Royal Bank of Scotland) was. The fourth post on this blog was the get-go of my "Sir Fred Goodwin decease watch". I enjoyed watching him together with his banking concern come upward apart. But I should non receive got enjoyed it. Schadenfreude is non an attractive personality feature together with the collapse of RBS has caused existent hurting to a lot of innocent parties. And a Schadenfreudegasm - good that but strikes me every bit unreasonably indulgent. After all my clients lost coin - together with I should together with would but cannot swap whatsoever pleasance I had for a refund of their losses.
This fourth dimension though I am but accepting the Schadenfreude. My customer are making coin together with I receive got no argue to experience guilty virtually that. Moreover I don't receive got to burn downward those employees. Unlike Royal Bank of Scotland (which Sir Fred destroyed) Sears employees were doomed anyway.
**. It is worth mentioning the GM example. GM was salvaged through bankruptcy alongside a dyad of hundred thou employees. But those employees were specially trapped, the shareholders were wiped out together with the Government contributed considerable money. That is what a "successful" transition for a occupation concern alongside that many employees looks like.
***. (Politics, employees together with realism). I am a haemorrhage marrow left-winger together with naturally experience a picayune paternalistic to the employees existence fired. However yous don't need to survive a haemorrhage marrow lefty to grip alongside my analysis. H5N1 realist volition enjoin that when yous receive got 300 thou employees your relation to them is going to survive critical inward running your business. Employees are "stakeholders" fifty-fifty if your solely (moral) criteria is "shareholder value". Realism over politics is a amend ground for investment.
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