Is Sears Going Out of Business

From its mail order business beginnings, the company grew to become the largest retailer in the United States by the mid-20th century. As with many other big name retailers, the company is facing a challenging business environment at the moment and the numbers has got a lot of improvement space now.

Is Sears going out of business?

Is Sears Going Out of Business

Sears, officially named Sears, Roebuck and Co., is an American mid-range chain of international department stores which was founded by Richard Warren Sears and Alvah Roebuck in the late 19th century.

Formerly a component of the Dow Jones Industrial Average, Sears merged with Kmart in early 2005, creating the Sears Holdings Corporation.

Sears Holdings Corporation, the publicly traded (NASDAQ: SHLD) parent of Kmart and Sears, Roebuck and Co., is USA’s fourth largest broadline retailer with approximately 3,900 full-line and specialty retail stores in the United States and Canada.

Whenever a bad financial situation happens to a public company, there will always be questions and rumors about that company going out of business.

Same as what we had covered with is CompUSA going out of business and Crocs going out of business, there had been questions about is Sears going out of business in the market.

Is Sears Going Out of Business

According to Sears Holdings Reports Second Quarter Results on Aug. 20, 2009:

“A net loss attributable to Holdings’ shareholders for the quarter of $94 million ($0.79 per diluted share) as compared to net income attributable to Holdings’ shareholders of $65 million ($0.50 per diluted share) in the second quarter of 2008;”

However, the management is taking steps in avoiding the company from going out of business, as you can see from the second quarter results report as well that there is a “continued progress in managing our financing obligations and commitments as long-term debt and capital lease obligations were reduced by $416 million (to $2.2 billion) and domestic letters of credit were reduced by $200 million (to $0.8 billion) at August 1, 2009 as compared to August 2, 2008.”

http://www.searsholdings.com/pubrel/pressOne.jsp?id=2009-08-20-0005080431

Is Sears going out of buisness?

With the value of the real estate and the value of the brands that SHLD holds, it is unlikely that they are going out of business in the short run.

Sears Holdings isn’t going to shutdown tomorrow and sell off its assets, because no one wants to put a lot of people out of jobs and close stores on $53 billion in revenue while there is a possibility that greater profit could be had from turning it around.

The idea is that Lampert can use extra cash and other equity as capital to do his value investing on a large scale.

Since value investing takes years to develop, Sears Holdings may looks like crap in the short-term. But for anything profitable to develop is going to take a long time either way, whether it be selling off assets or the stores becoming more profitable.

Bear in mind too that in this economy, older department stores are constantly being phased out or shut down by the increase in a more convenient and effective e-commerce business.

Again, is Sears going out of business? Time will tell.

For latest updates and more info, visit http://www.sears.com/

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