Sears Holdings reported its second quarter financial results and Morningstar analyst Kim Picciola had this to say: "It's more of the same - declining same-store sales but improving profitability. They're still struggling to give customers a compelling reason to shop at their stores."
Aylwin Lewis, Sears Holdings CEO and president, said the company is working to create more reasons for consumers to shop at its stores and "must continue to focus on our customers, improve the shopability of our stores and continue to give our customers reasons to shop our stores more frequently."
Howard Davidowitz, chairman of Davidowitz & Associates, is among the many who believe Mr. Lewis and his boss, Sears Holdings Chairman Edward Lampert, need to do something quickly if they hope to continue having a retail business to operate.
"No retailer in history has ever survived losing this amount of market share and comp (comparable) store sales," Mr. Davidowitz told The Associated Press. "When the quarter comes and earnings flatten out and sales keep going down, we're looking at the Titanic."
While the words of the Ms. Picciola and Messrs. Lewis and Davidowitz are eerily similar to what has been said by analysts and Sears Holdings before, the latest financial report came with an interesting switch. Sears Holdings is looking, by all indications, to make a deal to acquire another company.
In a released statement from the company, Mr. Lampert said, "Our strong financial position and cash flow generation provide us with the flexibility to capitalize on a wide range of market opportunities as they arise. In addition to investing in our business and acquiring our shares, we are prepared to invest substantial amounts of capital if we identify other attractive investment opportunities which have the potential for returns we believe appropriately compensate the company for the associated risks."
One deal Sears Holdings has not given up on is its proposed $908 million buyout of Sears Canada. The Globe and Mail reports Sears Holdings plans to attempt to overturn on appeal a ruling by Ontario Securities Commission, which found its offer of $18 a share for Sears Canada was "coercive and abusive of the minority shareholders."
Discussion Questions: Where would you look for Sears Holdings to make an acquisition? What would an acquisition likely mean for Sears Holdings current businesses including Sears, Kmart and Lands' End?
While there are no guarantees Edward Lampert will look to acquire another retail company, one possibility that has surfaced on investment blogs is BJ's Wholesale Club. The number-three warehouse membership club is looking at "strategic alternatives" for its business.