Does Sears Have a Bright Future?

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With shares of Sears (NASDAQ:SHLD) trading around $46, is SHLD an OUTPERFORM, WAIT AND SEE, or STAY AWAY? Let’s analyze the stock with the relevant sections of our CHEAT SHEET investing framework:

T = Trends for a Stock’s Movement

Sears operates as a specialty retailer in the United States and Canada. The company’s Kmart segment operates stores that sell merchandise under Jaclyn Smith and Joe Boxer labels; and Sears brand products, such as Kenmore, Craftsman, and DieHard. This segment’s stores provide consumer electronics, seasonal merchandise, outdoor living, toys, lawn and garden equipment, food and consumables, and apparel; and operate in-store pharmacies. The company’s Sears Domestic segment operates stores that sell merchandise under the Kenmore, Craftsman, DieHard, Lands’ End, Covington, Apostrophe, and Canyon River Blues brand names. Its stores provide appliances, consumer electronics, tools, sporting goods, outdoor living, lawn and garden equipment, home fashion products, apparel, footwear, jewelry, accessories, health and beauty products, pantry goods, household products, and toys, as well as automotive services and products.

It’s only a matter of weeks until Lands’ End is officially on its own. Sears amended its filing with the Securities and Exchange Commission last week, revealing that it will spin off the outdoor clothing retailer on April 4. Sears initially admitted its consideration of the separation strategy back in October, and then officially announced the deal in December. Five months after it initially floated the idea, the Chicago, Illinois-based company Sears unveiled its timeline on March 14, confirming that Lands’ End will soon turn into a publicly traded company. Lands’ End will trade on the NASDAQ under the symbol LE, beginning on April 7, and the transaction will hopefully help Sears raise cash and curb its revenue slide while allowing shareholders to benefit from the units’ separate significant values.

According to Fierce Retail, Lands’ End was first launched in 1963 as a sailboat hardware and equipment catalog before becoming a clothing company in 1977. Sears has owned the brand since 2002 and most of its 253 retail outlets are located inside Sears stores. Now, starting April 4, Lands’ End will enter into a lease agreement with the company and initially pay Sears around $27 million in total annual rent for those locations. Later, according to the SEC filing, the lease obligation will drop to $10.9 million for 102 Sears locations by 2019.

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