Friday, December 30, 2016

Sears Holdings announced yesterday that it secured a $200 million line of credit from ESL Investments, a hedge fund founded by Sears CEO Eddie Lampert. That news puffed a bit of life into Sears’ share price, which has fallen from the low $20s at the start of 2016 to less than $10 today.

The news also got us wondering what tales can be told from Sears’ other financial data, so we decided to take a look.

Short version: challenging environment to say the least.

First, we looked at Sears’ revenue, operating income, and cash on hand, from first quarter 2012 to third quarter 2016. The chart is below.

As you can see, all three numbers today are less than half of where they were five years ago. Depending on which quarter you choose, some of the numbers have declined by nearly 75 percent. Yikes.

We then compared Sears’ assets to liabilities. Again, nothing moving in the right direction, and starting in 2014 liabilities started to exceed assets. As of Oct. 28, liabilities exceeded assets by more than $3 billion. Again, the chart below:

Last we looked at cash flow from operations. This chart is a bit more difficult to read, but we can see that Sears only experienced positive cash flow in four of the last 19 quarters.

Analysts could use Calcbench databases to study any number of other metrics for Sears’ financial health: operating lease liabilities, debt, performance ratios, and the like. You can find the data with a few simple clicks on our Data Query Tool.

For Sears, while the financials look challenging, there are some bright spots. Viewing Sears solely as a retail play rather than as a combination of Merchandising and Real Estate portfolio appears to be the trick, but it’s still going to be a tough haul. For example, their sales of PP&E have kept them going the last couple of years.

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