NEW YORK — As Sears Holdings Corp. gets ready to post its third-quarter earnings results on Dec. 6, one analyst set a $169 price target on the stock — a 46 percent upside from recent valuations. Meanwhile, investors are waiting to hear some news about the retailer's apparel strategy as well as the fate of its Lands' End business.
Shares of Sears closed at $119.50, up 2.4 percent in trading on Thursday.
Investment banker Peter J. Solomon of the company that bears his name said at a recent conference on mergers and acquisitions, that he thinks chairman "[Edward] Lampert will figure out how to deal with Lands' End."
Sears bought the catalogue firm in 2002 for $1.9 billion. Sources said the asking price in March for Lands' End was $1.2 billion. The company later denied the report, and Lampert's first proclamation as chairman of the new Sears Holdings Corp. following the March 24 merger of Sears and Kmart was that Lands' End wasn't for sale. However, sources in the banking world said management pulled back after not liking the low valuations it was getting. Sears is said to have even approached former Lands' End chief executive officer Michael Smith to gauge his interest in returning to the business.
Solomon, whose firm represented the catalogue company when it was shopped in May 2002, said in a recent interview that his pitch to then Sears chairman Alan Lacy was, "When you go into a Sears, you look to the left and see a great brand name, Kenmore. You look to the right and you see Craftsman. At the back is Delco. In the middle of the store, what you see are labels. This is a chance to buy a great brand in the ready-to-wear business."
Following the retailer's second-quarter earnings report on Sept. 8, Bill Dreher of Deutsche Bank issued a research note predicting that Lampert, who was chairman of Kmart Holding Corp. and who engineered the merger with Sears, Roebuck & Co., will fulfill his vision for the combined company. According to Dreher, Lampert is taking his time to look at the "moving parts" before planning his next move.
As for valuation of the company, Dreher wrote that "significant value realizing catalysts provides upside potential in the shares of Sears Holding." One of those is the possible sale of Lands' End, which Dreher wrote could "generate aftertax cash proceeds of about $1.54 billion."Meanwhile, in a research note dated Nov. 15, Christine Augustine, analyst at Bear Stearns, outlined recent management changes at the retailer as well as a price check on Kmart's toy prices, which she found to be higher than Target and Wal-Mart.
Despite the higher toy prices and management turnover, Augustine described the investment risk-reward on the stock to be "compelling." Her worst-case scenario sees a 13 percent downside risk while her $169 price target represents a 46 percent upside gain. The scenario is based on the stock's price at the time of the report. Augustine reiterated an "outperform" rating on the stock.
Regarding management changes, Augustine said reporting to Lampert are: Lisa Shultz in the newly created post of executive vice president, Sears Holdings Apparel Design, overseeing Sears and Kmart's apparel design team; Maureen McGuire, executive vice president and chief marketing officer; Corwin Yulinsky, executive vice president, customer strategy and insight, and David McCreight, president of Lands' End.
Nine people report to Aylwin Lewis, ceo and president of Sears Holdings. They include back office and logistics departments, as well as store operations such as the general managers for Kmart Stores, Sears Essentials and Sears Grand, and the senior vice president of retail operations at Sears Roebuck.
In Augustine's price check for toys, she found Kmart's pricing strategy had not changed since its merger with Sears. Of the items compared, Wal-Mart was the low-price leader, with Target matching closely in price, and Kmart higher than its competitors.
Taking the final spot on the mens’ portion of New York Fashion Week calendar next month will be none other than @tomford. Though he’s shown his men’s wear in New York in the past, this will mark the first time the designer has shown his men’s collection alone during New York Fashion Week: Men’s. His runway show will debut on February 6 at the Park Avenue Armory. #wwdfashion
London-based couture house @ralphandrusso has certainly been in the spotlight, having its dresses worn by @beyonce, Angelina Jolie, Meghan Markle in her engagement photos and more. For couture, Tamara Ralph focused on ornamentation — think: feathers with chain mail, jet embroidery and clusters of pearls and crystals. See the rest of the collection on WWD.com #wwdfashion #couture (📷: @giovanni_giannoni_photo)
Minnie Mouse celebrated her 90th birthday by getting her own star on the Hollywood Walk of Fame. For her celebratory luncheon, @coach’s creative director @stuartvevers dressed her in a custom made prairie dress, complete with Vever’s take on the polka dot – black sequined versions – under a cropped motorcycle jacket. The designer also put his own mark on Minnie’s classic red shoes, infusing the color with sparkles and adding some Coach crystals. “We chose colors that were very Minnie and also represented quintessential Coach elements,” said Vevers. #wwdfashion #nationalpolkadotday (📷: George Chinsee)
@nickjonas is unveiling his first-ever apparel collection through a partnership with John Varvatos. The limited-edition capsule, which makes its debut in spring, also marks the first time the designer has collaborated with anyone on a line. “The process in working with Nick is amazing. It’s inspiring to be around someone who is not only connected with the trade that they do, but also with what’s happening in the environment around him, and how that connects to what we do with style,” said Varvatos. (RG: @johnvarvatos) #wwdfashion
@margotrobbie steps out onto the red carpet wearing @miumiu. The actress is nominated for “Outstanding Performance by a Female Actor in a Leading Role” in “I, Tonya” at the #SagAwards. (📷: Stewart Cook) #wwdfashion
For @massimogiorgetti of @msgm, the Nineties are his favorite decade. “They had a huge impact on my personal growth. What I like of the Nineties is that they are not so precise in terms of style as other decades…there was actually a bit of everything,” he said. As seen on MSGM’s Spring 2018 show: tie-dye and a bit of grunge, two styles that are synonymous with the decade #wwdfashion #wwddecades (📷: @kukukuba)