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How Desperate Is Sears?

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How Desperate Is Sears?

Sears Holdings Corp (NASDAQ: SHLD) has already sold off many of its assets, including Land's End, Sears Hometown and Outlet stores, Sears Canada and Orchard Supply, in addition to having spun off hundreds of stores into a giant real estate investment trust called Seritage Growth Properties (NYSE: SRG).

As if all of these moves weren't enough to save the troubled retailer, the company is said to be in talks to sell its Craftsman tool business.

According to Gadfly's Shelly Banjo, the asset sale at first glance looks like a "desperate attempt to scrape the bottom of the asset barrel" so the company can have enough cash to make it through the holiday season.

Related Link: Sears Shares Up 12% On Craftsman Short Squeeze

Sears' CEO Eddie Lampert responded by writing in a blog post there are currently "no plans and there have never been any plans" to close its other retail store, Kmart.

If Sears is desperate for cash, it sure is acting that way. However, Banjo argued that selling off brands one by one "might just work — for now." She continued that if Sears sells its Craftsman brand, it could "keep the company's blood pumping" for the time being.

Even if Sears is desperate and flirting with bankruptcy, Banjo noted that liquidating the company outright would trigger large costs associated with employee pensions and real estate leases so it may be more advantageous to continue trekking along and sell assets along the way.

Bottom line, as long as Lampert can continue selling parts of the company, taking out loans and pushing money around, the company can last on life support for several years before its "life support" can run out.

At last check, Sears was up 4.3 percent at $12.62.

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