It's not clear who would buy Sears' 51% stake in Sears Canada. Target's (TGT) name has been floated. But, despite Target's northern ambitions, it seems to have enough problems trying to attract customers to its Canadian stores. Target Canada lost $941 million, before interest and taxes, in fiscal 2013.
Walmart (WMT) is another name some have suggested. The company had 389 stores in Canada, as of Jan. 31. However, it's unclear how well those stores are doing. Walmart does not break out its Canadian financial results from its larger international results. The company did reveal in its most recent 10-K that its gross profit rate decreased 10 basis points for fiscal 2014 due to "price investments" in Canada, Brazil and Mexico. (Price investments mean Walmart takes a margin hit on the item in order to have the lowest price and attract customers to the store.)
Some investors said Sears Holdings, which lost 24% in the past full year, is now at an attractive enough valuation to warrant risking some money on its turnaround plans.
$SHLD may be an exercise in assessing a beat down stock and now looking for a decent valuation no matter the news, good or bad. On radar ~? JMar (@Sliver) May. 14 at 08:04 AM
However, many StockTwits users said that the Canada announcement was a sign of another terrible earnings report waiting in the wings. Analysts expect an earnings per share loss of $1.80 on $7.75 billion in sales, according to stats on Yahoo! Finance. That revenue figure is an 8% drop from the same period a year ago. The consensus price target for Sears is $27.25, according to the Analyst Ratings Network.
$SHLD turning back into the red, this Illusion is about to run it's course, earnings should be absolutely miserable yet again...? Michael (@MWM) May. 14 at 09:18 AM
At the time of publication the author held no positions in any of the stocks mentioned.
This article represents the opinion of a contributor and not necessarily that of TheStreet or its editorial staff.