NEW YORK (TheStreet) -- Sears Holding Corp. (SHLD) stock is higher by 1.61% to $43.62 at the start of trading on Monday morning, after announcing that it has entered into a joint venture with mall operator Simon Property Group (SPG) as part of Sears' continuing effort to unlock value.
The retailer has contributed 10 properties located at Simon malls to the joint venture. This also includes properties leased to outside parties.
The properties Sears contributed to the venture are worth $228 million. The arrangement with Simon Property is similar to another deal with mall operator General Growth Properties (GGP) announced earlier this month.
Sears will lease back from the joint venture and continue to operate existing stores at the properties contributed to the joint venture, Sears said in a statement released this morning.
Simon Property has contributed cash to the joint venture and the lease arrangements between Sears and the joint venture provide the joint venture with the ability to create additional value through re-developing contributed properties and re-leasing space at each property to third party tenants.
"We are pleased to reach this agreement with Simon Property Group, which is an important step in Sears Holdings' continued transformation to a membership company, without the significant asset intensity of its traditional retail business," Sears Holding CEO Edward Lampert said in the statement.
"This transaction, taken together with our other initiatives to create shareholder value through our vast real estate portfolio, enhances Sears Holdings' financial flexibility to invest in longer-term strategies such as our membership and integrated retail platforms. Sears Holdings will continue to operate these 10 stores and there will be minimal impact on their day-to-day operations or the overall shopping experience for our members," Lampert added.
Separately, TheStreet Ratings team rates SEARS HOLDINGS CORP as a Sell with a ratings score of D. TheStreet Ratings Team has this to say about their recommendation:
"We rate SEARS HOLDINGS CORP (SHLD) a SELL. This is driven by some concerns, which we believe should have a greater impact than any strengths, and could make it more difficult for investors to achieve positive results compared to most of the stocks we cover. The company's weaknesses can be seen in multiple areas, such as its weak operating cash flow and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- Net operating cash flow has declined marginally to $555.00 million or 1.42% when compared to the same quarter last year. In addition, when comparing the cash generation rate to the industry average, the firm's growth is significantly lower.
- The gross profit margin for SEARS HOLDINGS CORP is rather low; currently it is at 24.42%. Regardless of SHLD's low profit margin, it has managed to increase from the same period last year.
- SHLD, with its decline in revenue, underperformed when compared the industry average of 2.0%. Since the same quarter one year prior, revenues fell by 23.5%. The declining revenue has not hurt the company's bottom line, with increasing earnings per share.
- SEARS HOLDINGS CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. This company has reported somewhat volatile earnings recently. But, we feel it is poised for EPS growth in the coming year. During the past fiscal year, SEARS HOLDINGS CORP reported poor results of -$15.83 versus -$12.86 in the prior year. This year, the market expects an improvement in earnings (-$9.32 versus -$15.83).
- The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Multiline Retail industry. The net income increased by 55.6% when compared to the same quarter one year prior, rising from -$358.00 million to -$159.00 million.
- You can view the full analysis from the report here: SHLD Ratings Report