Tomorrow's pre-recorded earnings report is best explained by these two bar patrons:
Two Enron auditors walk into a bar. The bartender asks them if capitalism failed Sears or Sears failed capitalism. First auditor says, "Capitalism is when you have two cows. You sell one cow and buy a bull. Your herd multiplies and the economy grows. You sell the herd and retire on the income." Second auditor says, "Sears capitalism is when you have two cows. You sell three of them to your publicly listed company, using letters of credit opened by your brother-in-law at the bank. You then execute a debt/equity swap with an associated general offer so that you get all four cows back, with a tax exemption for five cows. You then transfer the milk rights of six cows via an intermediary to a Cayman Island company secretly owned by the majority shareholder of your publicly listed company who sells the rights to all seven cows back to your publicly listed company. The Annual Report to Shareholders says the company owns eight cows, with an option on one more.
Contest for best SHLD theme song. My nomination: Knock Knock Knocking on Heaven's door.
any thoughts on tomorrow's 9:30 Earning release?
Look out below!! $5 this week. Yessir.
Predicting $4.5/ share at market open tomorrow
The debt refinance is not a big deal. I actually expected them to refinance some of it. But, look at the balance sheet and you see nearly 5 billion in debt is due this year. 500M is only 1/10 of that. It doesn't change anything I said above. They're still losing billions of dollars every year and they still have inventory issues with the stuff on the shelves marked 90% off and vendors pulling out.
The pension move looks like Eddie knows the end is near and is trying to remove legal liability. Announcing the debt refinance at the same time is probably an attempt to make it seem like he's still fighting so he can keep the stock price up.
I did some quick math and projections based on what we know. Here's what I've come up with:
I'm projecting revenues at 17B for the year based on same stores sales down around 12% and 150 store closures (realistically it's probably closer to 200 stores closed). That gives us an approximate gross profit of 3.4B and operating loss of around 3.5B. Average that out for four quarters and that's about .89B. Add in the debt and Sears is losing about 2B a quarter this year.
Total assets are 9B which means in a best case scenario Sears could last 5 quarters which would put BK somewhere between April and July 2018. Here's the problem though:
1) The largest asset is inventory and most of that is being sold at 40-90% off right now. The inventory isn't worth anywhere near what it's on the books for. 2) The inventory isn't being replaced and when you don't have anything to sell you can't make money. 3) Most of the assets are long term assets and not liquid. Those will have to be sold at a loss. 4) Most of the brands that are worth anything have been sold. Kenmore isn't going to bring what Craftsman did. 5) Eddie is raping Sears on the real estate which means that 2.2B in PP&E is worthless.
Factor all that in and it looks like Sears will be in serious trouble by the end of the current quarter. Current assets will be depleted and the stores will be empty of merchandise. The only way to stay afloat will be to sell long term assets but that won't last long.
I'm predicting bankruptcy will be announced by the end of the summer.
Sorry for your loss....Longs,,,,,Today was your last chance to get out before Loss reporting tomorrow
Short interest down almost 5 million shares from 3 months ago. A LOT more room to the downside than last time it got down here.
If Eddie didn't have so much skin in the game they would of File already
This doesn't really buy them any time. They are burning to much to last very long. They couldn't pay this debt anyway has they would file for bankruptcy and money would be clawed back. So this actually doesn't change anything.
I think this is just Eddie trying to build a case that he was really trying to keep SHLD going, to help with fraudulent conveyance lawsuits.
All this stuff is stupidity. SHLD has no money to buy inventory, so its not a viable concept. Its just an asset burning machinge that Eddie is trying to pillage to save some of his investment.
2 seconds ago
So, Eddie and Berk own 80% of the company and Eddie is transferring money from one hand to the other and benefiting his own independent company in the process. What about the other 20% of the shareholders? What's he doing for them other than leaving them holding the bag? I need to look up these funds still holding SHLD stock again and ask them why are they letting him pull this over on them.
It looks like earnings are going to be bad. Typically stocks are up the day before earnings. The fact that this is down 4% means the people in the know are selling right now. I bet the news release yesterday was a pump so they could start selling.
If I was long I wouldn't hold this overnight. You're very likely to get destroyed in the morning. It would be smart to sell right now.
I totally nailed the release date!!! Which means exactly nothing, except I have been following this pig around for way too long since I can predict its behavior...
The 8k filing for the loan extension is out. I had suspected that there would be a nice fee for the 6 month extension, and there is. 8 million. So Eddie likely pays off the other lender on the 500 m, and collects an immediate 2% fee for the extension on the remaining 400 M.
It will finish down for the day as shorts regain control.
Sears reaches a debt deal? The July loan had been extended to next year. I believe that is Eddie's 500 mil loan. I guess that is technically a default then. They can't find anyone to lend them money and Eddie is not willing to lend any more money and certainly not for any meaningful length of time.
I remember another Eddie.... who talked out both sides of his mouth Example--- Eddie Haskell: "Wally, if your dumb brother tags along, I'm gonna" ---- (Mrs. Cleaver enters the room) ---"oh, good afternoon, Mrs. Cleaver. I was just telling Wallace how pleasant it would be for Theodore to accompany us to the movies."
Down in after hours too?
This does NOT look good for longs at all. We might drop into the 5s tomorrow.