Sunday, October 7, 2007

Sears Holdings Lands End Expansion On Track

At the annual meeting in May, Sears Holdings (SHLD) Chairman Eddie Lampert said that he planned to double the number if Lands End "store in a store" locations to around 200.

Since Halloween is rapidly coming upon us and Sears is well on track to spend $3 billion (or more) on share repurchased this year, I was concerned as to whether or not they were still on target. If you remember as far back as January I commented that the concept, then only in it infancy was "a great change" and I later commented in March, two months before Lampert made the expansion announcement that I thought it would eventually become the center of Sears retail clothing operations.

Since the products are good and the division is having record year after record year, I did need to know if we were buying back shares instead of continuing the Lands End expansion or if (hopefully ) we were doing both. I would have been greatly concerned if one was being done at the expense of the other. What is the saying "robbing Peter to pay Paul"? In that scenario, the massive share repurchase, while something I love would have been accomplished at the expense of the retail operations and that would have been just a temporary band aid approach. Not so good.

Were are we? As of last week we are at 171 Land's End "store within a store". So? It means we are well ahead of the pace to get to the 200 Lampert stated he wanted to be at while at the same time are in the process of taking 15% of the shares off the open market through repurchases. Perfect...

My guess is that the rush to get the stores done was to maximize their sales for the Holiday's this year and that after the first of the year the rate at which they open will slow a bit. No matter, what is important is that both the retail operation and returning cash to shareholders goals are being accomplished at the same time and neither is suffering to accomplish the other.

I am guessing Bill Ackman already knew this and perhaps this is why be has been buying 3.5% of the shares????


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