Sears: When Good News Looks Bad (SHLD)
In advance of its annual meeting tomorrow, Sears Holdings Corp. (NASDAQ: SHLD) this morning announced that its first quarter same-store sales fell -1.3% compared with the same period a year ago. The stock is up sharply on the news. Well,…
Well, not exactly on that news. Sears also announced that it expects to post EPS for the first quarter of $1.46-$1.84, way above the consensus estimate for an EPS loss of -$1.69. The company is realizing a one-time gain of $235 million from sales of US and Canadian stores. Sears expects net income in the range of $155-$195 million, including the sale.
A back-of-the-envelope calculation using the mid-point of the company’s net income projection ($175 million) indicates that the company would post an adjusted EPS of $1.64 based on 106.4 million shares outstanding. Still a good beat.
Sears also filed a preliminary Form S-1 yesterday announcing a rights offering for a spin-off of the company’s Sears Hometown and Outlet Stores into a separate company. Sears expects the rights offering to add $400-$500 million to the mother ship’s cash balance.
The rights offering and the profit forecast have combined to boost Sears’ stock in the pre-market this morning. Shares are up 6.8% at $57.43 in a 52-week range of $28.89-$87.50.
The company’s S-1 filing is available here.
Paul Ausick
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Paul Ausick has been writing for 247Wallst.com for more than a decade. He has written extensively on investing in the energy, defense, and technology sectors. In a previous life, he wrote technical documentation and managed a marketing communications group in Silicon Valley.
He has a bachelor's degree in English from the University of Chicago and now lives in Montana, where he fishes for trout in the summer and stays inside during the winter.
