I visited the new store in Atlanta yesterday. In no particular order here are my observations:
1) They shut down the old Kmart around October 10 and opened the new store last week - so the renovations did not take long.
2) The outside of the building is nice but it's brown, which is similar to the Sears Essentials store like the one I saw in Kansas City. I think brown is a bad choice because it's dull. But other than color it's nice. Also on the outside of the store it says Kenmore, Craftsman, Lands End and Pharmacy.
3) Lots of aisle space and Lands End is easily 1/3rd if not almost 1/2 the store. You wanna know why they are doing the RSTO deal possibly, I think he is building Lands End. I believe they are trying to turn this into a yuppy store and Lands End, RSTO, Name Brand hardware, etc.
4) They didn't put a whole lot of capital into this. If they spent $1.5 million I'd be shocked. Same in some spots dirty ceiling. I asked the manager about lighting and he said it was new bulbs but not new lighting. Same floor had some marks in some spots. New shelves, internet kiosks everywhere. Lands End, Lands End, Lands End.
5) The stores within stores thing is silly. It doesn't come off like that it comes off as different departments.
6) It's in a G-R-E-A-T location. Upper middle class suberbs, within one mile of HD, Fresh Market, Whole Foods, Target, restaurants, just outside 285 in Atlanta. Prime time location and definitely valuable real estate.
7) Manager is new. From California moved from an Office Depot there. So fresh blood. I was snapping pictures and several people stopped me to see what I was doing and he tried to take my disposable camera until I told him I was an investor and he was a really nice guy. We talked for 10 minutes or so.
8) Decent traffic for a Tuesday at midday.
9) I'm not saying that every location like this will work, but I think this store will TON it compared to what was there before, within minimum investment. It's really nice. Adding RSTO furniture and high end finishes could be a big deal. I know the EV of RSTO is not high, but it could have a meaningful effect on a store like this.
I am very bullish on ESL long-term so acknowledge my biases. My conclusion is that in many regards this store is not as big a deal as they made it out to be. Yet coming from how bad these kmarts and shlds are maybe it is. But I can see what they are going and it's making sense. I've been to the past two shareholder meetings and I totally get the whole "we are a learning, testing company."
Buffett wrote in early 1980s that Ben Graham always taught him that the best investments are those where small changes can have a big impact. With $50 billion in sales and a small bottom line, small changes here can make big difference. I've heard ESL say that's a major reason he was attracted to SHLD. I get it and I like it.
Riding the stock down from 195 hasn't been fun, but he'll shrink the float and when the cycle turns and they've retooled this thing it should be fun.
PS I have pictures that I can email of the store if you are interested respond to this post with your email address.
Great post! Thanks. I'd like to see the pictures. i've been offered a position at K-Mart and I;d like to see what's in the future. I have great interest in ESL and have been checking out everything for about a month now. Please send the pictures to:
If Eddie were to do the same thing for let's say 3200 stores that would require a $14B (that's Billion) capital investment into the company...ain't gona happen. Think what that would do the EPS!
Nice to hear that somewhere they are trying to improve the looks of the stores - however - if they don't do something to improve their support software then they can build everything with Gold and it won't improve anything. Inventory systems are 25 years old and don't work well. I see employee's with clipboards doing manual counts of what is on hand because THEY know the computer inventory is wrong. And they are trying to sell over the internet with the same system. Half the time the store even have what the customer bought over the internet. Hope the can do more..
Appreciate your due diligence on the Atlanta store and would encourage other investors do the same and report back. This sort of message is actually a very good value add for the long investors on the SHLD message board.
In response to the inventory systems, I would have to beleive that management would be measuring customer demand and fill rates on an SKU level daily and merchandising accordingly. If the above message is accurate and the appropriate logistics and inventory management systems are not yet in place, this is a fundamental problem. It means they need to bring in more experienced senior management.
How are stores in the other key markets: LA, NY, Seattle, Chicago, Boston, Orange County, Washington DC, Kansas City, Cleveland, etc.? Would like to hear more due diligence.
Thank you for a very intelligent post. It is nice to read something of value on this Board rather than the usual litany of messages that litter this Board:
"Eddie is an idiot,"
"Eddie and Cramer are crooks,"
"Eddie is a genious,"
"Eddie is the next Buffett,"
"I went to Kmart and there were no customers,"
"These retailers won't exist in 10 years,"
"The consumer is dead-- this company will have a terrible quarter,"
etc, etc, etc.
For once, somebody wrote something interesting that is NOT already known by everybody in the market. Yes, I am long and have been since before the merger. Yes, I believe in Eddie and the process he is taking to rebuild this company (you get it! Test and learn, and then test again! Make small incremental changes one step at a time rather than in one sweeping move.).
It is amazing the garbage that is said about this company by supposedly smart people (Davidowitz comes to mind). It baffles me how they don't understand what is going on.
Anyway, your post was excellent and actually added value. Please send me the pictures:
Thank you and keep up the good work.
I tend to be somewhat pessimistic about the future of SHLD but I did enjoy your post and even agree with your comments
Brick and mortor are a thing of the past
Internet is the comming thing
Thanks for a decent objective outlook =-))
anybody that really believes the Eddie wants to rebuild Sears through investment is crazy. The only purpose of Sears is to generate cash for other ventures. When free cash flow gets to be an issue, look for asset sales.