Sears: One Thing After Another

As it happens, I was having coffee yesterday with an industry contact, and one of the things we talked about was the sad state that Sears is in. So it's interesting to see this bearish item pop up on my screen this morning:

24/7 Wall St: Eddie Lampert Taps Out At Sears

Is Sears (SHLD) getting a little low on cash? A bunch of analysts think so. The cash balance that Sears showed in its last financial statement was a bit light.
According to The Wall Street Journal "less cash could limit management's ability to spend big to revitalize sales and stores." Since retailer customers are going Wal-Mart (WMT), Best Buy (BBY), and JC Penney (JCP), Sears will almost have to improve both its stores and its inventory. With retail already in trouble due to an economic slowdown, the question is, where will Sears go for the cash?

There's two places where Sears can get money: customers' pockets and the capital markets. So far Sears has proved unable to get cash out of customers, so where's the incentive for investors to give them any more, unless it's at a steep risk premium?

By the way, the graphic above, of an empty parking lot in front of a Sears store seemed entirely apropos.

Sphere: Related Content