Is Sears (SHLD) getting a little low on cash? A bunch of analysts think so. The cash balance that Sears showed in its last financial statement was a bit light.
According to The Wall Street Journal "less cash could limit management’s ability to spend big to revitalize sales and stores." Since retailer customers are going Wal-Mart (WMT), Best Buy (BBY), and JC Penney (JCP), Sears will almost have to improve both its stores and its inventory. With retail already in trouble due to an economic slowdown, the question is, where will Sears go for the cash?
Lampert made a classic mistake when he built Sears Holdings. He took two weak retailers, Sears and K-Mart, and put them together. There were probably some economies of scale and cost savings. That does not help much if no one will come to the stores.
Shares in Sears fell below $85 in mid-January when the company announce preliminary results. They have made a recovery to over $103.
If Lampert and Sears have to go to the capital markets to raise cash, Wall St. can watch SHLD shares fall way below their 52-week bottom.
Douglas A. McIntyre
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