Sears closings: After store closures, little hope for a rebound
Sears' decision to听close听up to 120 Sears and Kmart stores shows a retailer struggling to draw shoppers at a time of increasing competition, Credit Suisse retail analyst Gary Balter told CNBC.
"I don't know how they're going to turn it around," he said Tuesday. "This was a company making $3.6 billion in听Ebitda听four years ago," compared to $400 million this year "at a time when others are turning things around."
Balter, with a $20 price target and "underperform" rating on the stock, said Sears听has been losing market share to听Home Depot听and听Lowe's听on sales of power tools, and听Wal-Mart听and听Target听on drawing shoppers seeking discounts.
Home Depot听and Lowe's听in particular stand to benefit from Sears closing stores because they've already been aggressively pricing appliances, which make up about 7 percent of Home Depot sales and 10 percent at Lowe's. Those who won't benefit are Sears suppliers, such as听Whirlpool, one of the companies that makes Sears' Kenmore appliance.
"They鈥檝e done a very nice job online," Balter said of Sears' website, "but they can鈥檛 get people into the stores, and that鈥檚 where most of their asset base is."
He said Chairman Eddie Lampert has limited choices. Land's End, which Sears bought in 2002, is a well-managed subsidiary with $1.5 billion to $2 billion in sales that can "be easily separated from Sears," Balter said. After that, however, the problem is "how do you separate the other assets without destroying the franchise?"
