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.
Sears is like a person who jumped into a pool with concrete debt ties to their ankles and they are trying to stay afloat with 99 cent arm floaties.
I've been a long term short on this pig, but have changed my strategy. Have made good/great money on puts, but the premiums are just insane. I agree with Tilden in that another short squeeze is possible/likely. BK is totally up to Eddie, and he ain't playing. He has either funded cash flow himself, or sold off assets and has been intractable in watching this pig shrink so this could absolutely drag on well into 2018. And while his assets are shrinking, there's still quite a lot left. So I've switched to doing spreads, buying out of the money calls AND puts, 6-8 weeks out. Those are cheap, and I'm playing equally the chances of a squeeze or a BK. Good luck to all.
will we see the 52 week low of 5.50 this week or the yahoo target of $4.00?
Still no announcement for day of quarterly report yet? BK filing coming in lieu of a report? Last year they announced the day of the report on May 12
Is today the day we see $115? Of course not, that's insane.
Okay, the Sears longs had their fun. Now, let's get back to dropping this down to 0.
why stock go down?
I went into my local Sears (first time I've been in there in probably a decade). They had everything in the store marked down from 40%-90%. That sounds to me like a company dumping inventory so they can keep some cash flow. The problem is,once the inventory is gone they don't have much left. Only one billion in current assets to cover 5 billion in current liabilities plus 2+ billion in annual losses. Where are they going to come up with an extra 6 billion a year?
A. A paid pumper B. Eddie himself C. A young kid having fun trolling everyone D. A Sears employee who doesn't want to lose his job. E. Really that stupid
Personally, I don't think anyone could hold that long continually losing money and still be positive about the stock.
Earnings report at end of month will drop this stock like no tomorrow.
2 seconds ago
Eddie just got one of his wealthy contacts to bump up the price of the stock by $17. to $25!...That was a bad dream I had last night.
A note on the lawsuit between Sears and One World. I did a PACER search of court records to see what I could learn from the filings. One thing of note is that the news articles were unclear as to which party was the plantiff. On May 15th, there is a suit filed by One World AND KMART against Sears Holdings. This record is noted as cancelled/in error. There has been no subsequent filing in US courts by either party against the other.
I have no idea what it means, but I'll keep an eye on pacer for new entries.
maybe JCP will buy SHLD.. and then Kohls can buy JCP... and then Macy's can buy...
$2 next week? Then again it should be below $2 by now.
So who got sucked into the .50 swing this morning? More delusional longs?? Maybe....inquiring minds want to know.
30 more stores closing. Announced Friday after the market closed.
what is keeping SHLD from insolvency right now and further on?
Earnings next week with or without the Memorial Day Going Out of Business sale announcement?