The Edward S. Lampert show continues, only now the real estate play seems more than ever a slow monetization of assets.

The company on Thursday posted its first quarterly profit since 2012, but — in an admittedly down market — investors put their focus elsewhere and sent shares of Sears down 1.6 percent to close at $22.97. Perhaps that’s because the profits were a reflection of Lampert’s real estate maneuvers and not from the company’s core retail operations.

Lampert holds the same posts — chairman and chief executive officer — at Sears and ESL Investments. ESL, which holds a 48.4 percent stake in Sears, is the hedge fund that bailed Kmart Corp. out of bankruptcy in 2003 after gaining control of a bond that Lampert acquired for less than $1 billion. Kmart then acquired Sears, Roebuck & Co. in 2005 in an $11 billion deal to form Sears Holdings. Back then, some hailed him as the next Warren Buffett. At one point, shares of Sears once traded at $195.18 as investors cheered Lampert’s financial moves. Skeptics questioned what the hedge fund manager saw in the two retailers, not to mention his lack of merchandising know-how.

So what did Lampert see in the merged entity that others did not? Instead of the hedge fund manager as the next great investor, Lampert the next great liquidator might be a more accurate description. The first hint was in 2006 when he transferred ownership of the intellectual property for Sears’ key brands — Kenmore, Craftsman and DieHard — to a bankrupt-remote entity called KCD in a $1.8 billion securitization bond. KCD now charges Sears a royalty fee for the licensing of the brands.

Lampert used his magic wand again earlier this year when Sears transferred 254 of its top store sites to Seritage Growth Properties, a real estate investment trust established by Sears. Given Sears has enough cash to operate for at least another year, those store assets would already be out of its holdings and unreachable by creditors should Sears ever file for bankruptcy down the road. The formation of Seritage is on top of the joint venture deals with mall operators for other real estate assets.

Lampert has been showing his considerable financial muscle to search for shareholder value: the Lands’ End spin-off that generated a $500 million cash dividend to Sears; a rights offering for senior unsecured notes and warrants to raise $625 million in proceeds; a rights offering for Sears Canada to raise $380 million; a short-term $400 million loan from Lampert’s ESL, and the leasing arrangement for seven Sears sites to house Primark stores. And that’s just in the past year. In 2012, Sears Hometown and its Outlet business was spun off, raising $346.5 million from a rights offering and garnering a $100 million cash dividend from Hometown, and its Orchard Supply Hardware Stores unit in 2011 was spun off as stock to shareholders.

To be sure, REIT formations and real estate joint ventures seem to be in vogue as Hudson’s Bay Co. is going the JV route, and an activist shareholder is pushing Macy’s Inc. to consider its options as well. Yet, it’s the formation of Seritage that’s particularly intriguing on the cash front.

Lampert has been upfront about transforming Sears into an asset-light company that is focused more on a technology driven member-centric Shop Your Way platform, a retooling of the retail matrix that’s been underway for several years. But for Lampert it isn’t just about moving real estate and store assets under a different ownership. Sears and Kmart stores owned by Seritage now pay rent to occupy the space, and that’s where it gets interesting because Lampert has said the space can easily be adjusted. In the pre-recorded remarks to Wall Street after the company posted its latest earnings results, chief financial officer Rob Schriesheim elaborated further.

“Due to the structure of the [Seritage and joint venture] leases, we expect that our cash rent obligations to Seritage and the joint venture partners will decline materially over time as space in these stores is recaptured,” Schriesheim noted. That could lead to even less total square footage over time for the two nameplates, on top of the 200 stores shuttered in 2014 plus any future store closures. In a blog post in December, Lampert said he expects most of the company’s stores to stay open for the “foreseeable future,” but then added that the company has been approached about the idea of repositioning some stores while being paid by mall owners and developers for the repositioning privilege. He’s also talked about shrinking the selling space by leasing a portion of the square footage to other retailers. The company began 2015 with 1,700 Sears and Kmart big-box stores in operation, representing about 200 million square feet of space. While not insignificant, that’s still a 50 percent drop from the 3,400 stores in operation for the year ended Jan. 28, 2006, following completion of the Kmart-Sears merger.

As for the core retail operation, Sears still has much work to do if Lampert wants to claim any kind of realistic turnaround success.

For the three months ended Aug. 1, net income was $208 million, or $1.84 a diluted share, against a net loss of $573 million, or $5.39, a year ago. The aggregate real estate transactions that were done in connection with the formation of the REIT gave Sears $2.7 billion in gross proceeds. On an adjusted basis for certain items, the net loss would have been $256 million, or $2.40 a diluted share, versus a net loss of $293 million, or $2.76, in the same year-ago quarter.

Total revenues in the quarter dropped 22.5 percent to $6.21 billion from $8.01 billion. And comparable-store sales for stores open at least a year saw declines of 7.3 percent at Kmart and 14 percent at Sears’ domestic business. The company said comps were driven in part by a “highly targeted promotional and marketing spend to better align with member needs” and the shift away from low-margin categories such as consumer electronics. There was a slight improvement as Kmart’s gross margin improved 80 basis points and Sears saw gross margin gain 210 basis points.

On the credit side, some analysts have questioned how much time, and retail life, Sears had left given its cash burn rate. That in part likely contributed to the faster pace of financial maneuvers in the past year as Lampert pulled as many levers possible to keep the train running.

Lampert said second-quarter results marked the “fourth consecutive quarter of improved results.” With gross margin gains at both nameplates and a narrowing of the year-ago loss on an adjusted basis, Lampert isn’t wrong. The problem is there’s no guarantee that the retail business restructuring will take hold, and it could be moot if enough consumers decide they no longer need a Kmart or Sears in their backyard.

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