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In an article published on The Street on Thursday, Belus Capital Advisors CEO Brian Sozzi wrote that Sears Holdings Corp's (NASDAQ: SHLD) Chief Executive Officer and largest shareholder Eddie Lampert may have hinted that its stores may have to "virtually vanish" from America to survive.
Shares of Sears traded recently at $35.08, down 7.4 percent.
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Sozzi explained that back in November, Sears disclosed it plans to form a real estate investment trust (REIT) that would own prime Sears and Kmart locations in the U.S. By doing so, the company would transform from a retailer into a "cash-collecting landlord."
On Thursday, Lampert said a pre-recorded earnings call that some of these locations could even cease operating as Sears or Kmart stores if it can find better tenants.
"We believe that many locations can be re-purposed with or without Sears Holdings as an anchor, which would give the REIT the potential for value creation, as well as downside protection if Sears Holdings were unable to continue to operate certain stores profitably," Lampert said.
Related Link: Here's Who Benefits The Most If Sears Goes Bankrupt
Sozzi noted that Sears executives "not so quietly" trumpeted the turnaround of the company, while the raw numbers for the business "painted a different picture." Kmart same-store sales dipped 2 percent in the quarter, while same-store sales at Sears fell 7 percent.
Sozzi also added that the future of those locations not selected for the REIT looks "uncertain" due to fierce competition by rival retailers including Wal-Mart, Target, Best Buy and Home Depot.
Bottom line, Sozzi argued "although Sears did not disclose its store closure plans for 2015 on Thursday, more are likely lurking in the wings as the retailer seeks to preserve the cash that will eventually arrive from the formation of the REIT."
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New research shows the biggest crypto buyers are back. And this time? They could hold for the possibility that Bitcoin will surpass $100,000 in 2024. You don’t want to miss the next massive crypto bull run like we saw in 2020 and 2021. To know exactly what’s going on and what to buy… Get Access To Benzinga’s Best Crypto Research and Investments For Only $1.