While Edward Lampert and Sears Holdings haven't shown any real talent for retailing, investors in the company have been able to take solace in the strong performance of the company's stock. That may have made yesterday's share price drop of $9.76 (-5.2 percent) in after-hours trading a bit more jolting.
The drop took place after both Sears and Kmart once again reported declines in same-store sales, this time for the first 12 weeks of its fiscal 2007 first quarter. Sears was off 2.4 percent for stores open at least a year while Kmart was down 4.7 percent.
Sears said it was hurt by slower than expected home appliance sales. The company said the soft housing market and increased competition in the category played roles in its home appliance category performance.
While sales at the two chains continue what may be an inexorable path downward, Sears Holdings remains flush with cash ($3 billion in cash and cash equivalents) to either invest in the retail businesses (when pigs fly) or to purchase another entity. Companies including RadioShack, Home Depot, BJ's Wholesale Club, Safeway and Gap Inc. have all been rumored at one point or another as potential acquisition targets. Mr. Lampert has attempted to purchase the remaining shares of Sears Canada not already owned by Sears Holdings but that bid has been unsuccessful to date.
Discussion Questions: What do you make of the latest numbers from Sears and Kmart? What do you expect Sears Holdings to do with all its cash?