Troubled Sears Is 'Burning the Furniture to Stay Warm'

Latest financial results aren't so hot
By Kate Seamons,  Newser Staff
Posted Oct 30, 2013 6:30 AM CDT
Troubled Sears Is 'Burning the Furniture to Stay Warm'
Sears at the Eaton Centre in Toronto opens its doors for business on Tuesday, Oct. 29, 2013.   (AP Photo/The Canadian Press, Frank Gunn)

"They are a zombie retailer, and with [Tuesday's] announcement, they are dismembering their body." Such is the gloomy pronouncement from Belus Capital Advisors honcho Brian Sozzi, who was yesterday discussing Sears with the New York Times. It's not exactly the first time Sozzi has dinged the company: This month he posted online photos of empty shelves and stained carpets taken in a number of New York and New Jersey Sears locations, declaring "it's just badness throughout." The tough times were on display yesterday, as the retailer announced it was considering peeling off its Lands' End and Sears Auto Center brands to raise cash, likely spinning off the former and seeking a buyer for the latter.

Bloomberg reports that the move could bring in $2.5 billion in much-needed cash, and Sears sees it as a way to become "a more focused company." The managing director of an NYC investment group sees it differently: "They're continuing to burn the furniture to stay warm." And what's likely to remain of Sears is becoming less valuable by the day: Yesterday's financial results showed a 3.7% drop in same-store sales over a 12-week period, and predicted a Q3 earnings loss of as much as $300 million. An analyst sums up the core issue thusly: "They haven't spent on the store base, and that's the issue." To wit, Sears spent about $1.51 per square foot on its Sears stores last year, reports Bloomberg, while Home Depot spent $5.56 and Macy's spent $6.25. (More Sears stories.)

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