Summary
Just one more example of "irrational exuberance". The investors who have been driving the price of SHLD through the roof continue to have blind faith in Mr. Lampert's ability to somehow transform this mortally wounded giant retailer into something resembling Mr. Buffet's empire. While anything is possible in today's climate with so much money chasing so few deals, I firmly believe there is no way that the turnaround will be the result of Sears or Kmart taking market share away from ANY of their primary competitors. Far better merchants and/or retail businessmen than Mr. Lampert have tried and failed. There is simply no reason to think that Mr. Lampert, together with the less experienced team he has put together, will continue to wring profits out of SHLD by further cutting costs in the face of declining sales and market share.
Analysis
The reasons for my comments, which by the way are shared by the vast majority of knowledgeable retailers, is simple. For one thing there really are no more costs to cut! For another thing they have now woken up to the fact that they have cut their advertising budget too far and are starting to increase their advertising costs to a level that approximates 50% of their competition.
They are also starting to realize that they have also cut their leasehold improvement budget far too much and are beginning to increase expenditures in that area as well.
My basic commentary can best be summarized by the observation of: too little, too late. I might also add: with too little talent or understanding.
