Sears Is Surviving

Not bad enough to do the job for the shorts. That's the headline takeaway of the Sears (SHLD - commentary - Cramer's Take) quarter. It just wasn't weak enough, it didn't show a loss, it didn't show a big inventory build and it didn't show a decline in EBITDA. It just wasn't that horrible.

That's pretty amazing given the fact that this is the worst housing decline since the Depression, and this is the worst retailer for the era, with both Home Depot (HD - commentary - Cramer's Take) and Lowe's (LOW - commentary - Cramer's Take) on their game for the moment.

In the meantime, the company did not pour money into stores, perhaps wise given the lack of a decline in same-store sales that you would have expected -- pretty much in line with the other guys, and better than the spring. I don't even know if it would have been worth it. Sears did open some new electronic stores, and I know the bears aren't going to like to hear this, but I think the stores are doing OK. I also think that Sears could be benefitting from what Monro Muffler (MNRO - commentary - Cramer's Take) told me the other night: people are keeping their cars much longer and fixing them. Sears is the cheapest place to get these parts.

Could it be that the worst in Sears is over? If you believe, as I do, that housing bottoms on June 30th, 2009, you can make a case that like Toll (TOL - commentary - Cramer's Take), Pulte (PHM - commentary - Cramer's Take), Centex (CTX - commentary - Cramer's Take) and KB Home (KBH - commentary - Cramer's Take), this one is bottoming, as that turns out to be its real cohort.

Eddie Lampert bought back a huge amount of stock during the dip. This profitable retailer is now worth $10 billion, and it has a lot of capital. You have to wonder whether you can get $40 billion in revenues for under $10 billion in equity if the company isn't losing money.

Credit Suisse, Morgan Stanley, Deutsche Bank and Goldman all have a sell on it. Lehman's a neutral. Seems too bearish after this not-as-bad-as-expected-and-as-good-as-its-peers retail performance.

At the time of publication, Cramer was long Goldman Sachs.

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