Sears Earnings Call – Real Talk

With “Real Talk” we give you an abridged break down of corporate earnings calls and our take on what the executives are really saying / general commentary.

Today we are taking a look at the Sears Holdings (NASDAQ: SHLD) Q2 2017 earnings call. Actual text from Chris Brathwaite, Vice President of Corporate Communications Sears Holdings is in bold, our commentary is in italics.

At Sears Holdings, we remain focused on streamlining our operations, right-sizing our store footprint, reducing our operating expenses and taking incremental actions to further improve our financial performance in a challenging retail environment.

We are getting shalacked by guys like Amazon and Walmart. Our stores are struggling and the malls they are in are struggling too…It’s like a really shitty situation that’s trapped inside just a shitty one. We’re going to fire some people and shut stores to save money as well as other “incremental actions”. Just like I’m taking incremental actions to get a six pack, aka hoping I wake up one day and it’s just there.

We reported total revenues of $4.4 billion in the second quarter of 2017, compared to $5.7 billion in the same quarter last year. The decrease in total revenues was largely driven by continued softness in store traffic and elevated price competition in the retail industry, as well as the closures of under-performing stores, which accounted for approximately $770 million of the revenue decrease..

hmmm Chris a $1.3 Billion decline sounds like a lot to me, doesn’t it? What’s that? $770 Million of that is because you closed stores? Ok now I’m on board with this loss, I’m buying what you’re selling. In fact I’m going to try this with my boss next week. I understand that I didn’t get as much done this week as last week, but… it’s because I’ve been taking half days so actually we’re all good.

From an operational perspective, we remain focused on maximizing the value of our assets, and finding new ways to engage and better serve our members

I have no clue what any of these new ways are yet, but we’re focused on finding them.

Earlier this summer, we also announced a strategic partnership with Time Inc. that delivers even more value for our Shop Your Way members. Over 300 magazine titles – including Sports Illustrated, Time and InStyle …

Why didn’t anyone think of this before? Damn Sears just turned the game on its head by offering free magazines to people…Side note: WHO THE FUCK STILL READS MAGAZINES??? Pro tip Sears, your digital strategy is going the WRONG WAY. You just know that there is some 60 year old Mortimer Duke looking exec who thinks this is a brilliant idea. He also probably still uses the terms  trousers and tucks his tshirts in while out of the office.

In addition, our Sears Home Services and Innovel Solutions divisions will provide white-glove service for delivery, installation and product protection for the full range of Kenmore home appliances sold on Amazon.com…

Here’s the silver lining imo. Delivery and installation services are clearly on the up and up at Amazon so getting involved here is a solid play.

We have a valuable real estate portfolio, which at the end of the quarter comprised of nearly 900 leased as well as over 350 owned stores, many in prominent locations.

My face when someone says mall anchor stores are prominent locations?

ice cube

These financing and real estate transactions, among others, demonstrate the Company’s commitment to generating additional liquidity in order to fund our transformation while continuing to fulfill all our financial obligations.

Yeah…These transactions demonstrate our commitment to funding our transformation. Just like someone who is drowning is committed to keeping their head above water.

We reached an agreement with our lenders to amend our existing Second Lien Credit Agreement to provide for the creation of a $500 million Line of Credit Loan Facility. Seven investors have made loans to the Company under the Line of Credit Facility, including affiliates of ESL investments and certain of our directors and companies affiliated with them.

A Loan from ESL Investments which is run by Eddie Lampert. What’s that? His name sounds familiar? Maybe because Eddie Lampert is also the CEO of Sears Holdings. Here’s an imaginary conversation to put things in perspective

CEO Eddie: Sears need more capital, does anyone want to invest?

Literally Everyone: (crickets)

ESL Eddie: …… 🙂

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We are increasingly confident in our future and remain committed to delivering more value and better services for our members through our integrated retail offerings.

Chris, blink two times if you’re ok. I feel like if there were video of this conference call you’d see Chris reading off a tattered piece of paper with Eddie  in a ski mask and a gun pointed at him.

Lastly, real, real talk for one second. 1 mention of Sears.com on the entire call and no mention of investments in that platform. Good thing online shopping is just a fad.

 

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