Sears Holdings sees sales drop.
Thursday, May 31st, 2007Sears reported quarterly earnings that missed security analyst estimates. Sales fell about 2.5 percent, while same store sales fell 3.9 percent. At Sears, sales were down 3.4 percent, while Kmart declined by 4.4 percent.
These results were pretty much in line with other mature retailers that showed a weakening sales picture. But Sears Holdings is run by Eddie Lampert, chairman, who is a hedge fund operator. The knock on Lampert is that he under-invests in his stores and rather put his funds to use in the financial markets.
Wal-Mart has not made an aggressive run at Sears or Kmart, while Target has. In the financial notes, Lampert is reinvesting in its pharmacy business, which is more than likely a move to match Wal-Mart and several aggressive drug chains wooing seniors.
The problem with a negative retail number is that it indicates that after inflation, the stores are having real declines in the 6 percent range. Sears has plenty of cash on hand and has no problems finding spots where they can invest. The question is, “How long can the slide continue before its problems become chronic?”