This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

The Deal: Sears Has Time on Its Side

NEW YORK ( The Deal) -- In a twist of fate over the past year or two, department store operator Sears Holdings (SHLD) may have more time to turn itself around than troubled rival J.C. Penney (JCP).

That might not have been what industry watchers would have predicted when Apple's (AAPL) retail head Ron Johnson sauntered into the Plano, Texas-based retailer in late 2011, bringing a Sillicon Valley approach to shake up the dowdy department store chain.

That swashbuckling, and an inattentiveness to J.C. Penney's core customers, cost Johnson his job in short order.

And the drama continues at J.C. Penney as Johnson's original backer, hedge fund manager Bill Ackman, had a very public spat with the board he sat on which he left in a huff.

Which might go to show: hedge fund managers shouldn't run retailers. Because that has been somewhat the case over at Hoffman Estate, Ill.-based Sears where CEO Eddie Lampert still controls about 62% of the company.

Yet Sears could be in a better position to make it through a revamp than J.C. Penney for a number of reasons.

In Sears' favor is a real estate portfolio it has yet to fully monetize, which could be borrowed against to help fund operations, according to according to Moody's Investors Service analyst Scott Tuhy. By Tuhy's count, Sears' real estate holdings, as measured by store count, are comparable to its competitor's so it should be able to raise at least another $2.5 billion as J.C. Penney has done already.

Sears also owns Land's End, which it acquired for $1.9 billion in cash in 2002. From the most recent figure available, in January 2012, the division was valued at $1.25 billion, or about 7.5 times Ebitda, according to Mary Ross Gilbert, a managing director at Imperial Capital. But considering recent multiples for retail consumer brands stretching into the double digits, that number could be higher, perhaps around $1.5 billion at about 9 times Ebitda.

Sears has also earmarked $215 million in real estate to be sold in the future, adding yet more cash to its balance sheet, with $45 million anticipated in the next six weeks and another $170 million remaining.

1 of 3

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,259.64 +102.79 0.60%
S&P 500 2,009.36 +7.79 0.39%
NASDAQ 4,589.3270 +27.1380 0.59%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs