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Why Sears Leaves a Bad Aftertaste


Retailer shows lack of shoppers and recklessly displayed merchandise.


Greetings from New York where it's hot and I have yet to find someone to play full-out hooky with me on the golf course. Thus I've gone from taping a Macke Unmuzzled video (this time featuring my whole head!) and sizing up the tape to watching "To Kill a Mockingbird" on TiVo (TIVO) and mulling a workout. Regardless, the end of August is a time for staying in the loop on the tape without actually trading it. Expiration, thin volumes and huge, random, moves. I'd rather shoot 103 in the heat using my patented "three birdies and twice that many triples" technique than put money to risk here.

Here's what else I'm mulling and ruing over this afternoon:

  • I actually stopped by a Sears (SHLD) store yesterday afternoon, simply to confirm that I wasn't picking on the company unfairly for being a rotten merchant. Other stores almost certainly vary but, based on what I saw (freaky absence of shopping life-forms and bad merchandise recklessly displayed), I've been a bit too nice to Sears regarding its ineptitude. As for the missed trade, the short side is always tougher but, man, writing about both sides of a long Target (TGT) and sell/ short Sears paired trade but not pulling the trigger on either is just sloth.

    Which means I also missed a chance to get long sloth and short hubris. Who needs golf when I can beat myself up over trades never made?

  • General Motors (GOVFIASCO) is "coming to the aid" of car dealers still waiting to get paid for the government's Cash for Clunkers debacle. Earlier this week GM saved American Axle (AXL) in a manner that didn't even resemble capitalism but still sent AXL over 150% higher. It's good for cash bleeding, bankrupt corporations operating on the government dole to share their fake wealth with the less fortunate.

  • For its part, D.C. has moved on, changing the focus to Swine Flu (which only coincidentally gives a booster shot to passing a health care program regardless of the country not wanting it). Quint laid out ways to trade the Government Sponsored Pandemic Panic in a grimly logical way yesterday and it's worthwhile reading. Trading the future news flow is much more constructive than either panicking or raging against the political Machine. As either Sun Tzu or Bud Fox said, "when your enemy is hurting himself, don't interrupt." Regardless of which party you lean towards, inefficient use of tax payer money and the destruction of capitalism is the enemy. Reassuringly, the movement is unraveling rather quickly as the voters Yawp!

  • In legitimate speculating news, The Gap (GPS) is higher today prior to reporting after the bell. SF's once mighty seller of basics has made a bit of a sneaky comeback which not many folks other than my old pal, Gee Adami, have paid notice. That said, the stock is up 15% in the last month and 40% YTD. Gap is once again a good merchant and, like fellow Lazarus J. Crew (JCG), those who caught the bottom have profited mightily. I'd be on the sidelines on both names even if it wasn't late August but watch the Gap tomorrow to see if "better than expected but not great" remains enough to catalyze a rally.

  • I washed the grotesque taste of horrible retail out of my mouth by racing from Sears to Starbucks (SBUX) on Wednesday. Frankly, I just wanted the caffeine to restore some of the vitality sucked from me at SHLD and the Starbucks was one of the company's mini-stores at the back of a Barnes and Noble (BKS).

    Not being a fan of shopping at either Barnes and Noble or Starbucks, my plan was akin to kicking heroin by going on a crack binge, but I was desperate. Shockingly, I was impressed by Starbucks for the first time in ages which caused me to realize I've also missed a big move in SBUX. Not only that, I liked not only the Barnes & Noble but thought the company's quarterly report was solid as well. BKS has had a decent, not great, year and was "better than expectations," no matter what the tape is saying. I'd buy BKS in the face-saving mid-teens. As for SBUX, the stock is so far gone that I may have to admire it from the bench. Regardless, kudos to Howard Schultz and crew for pulling SBUX out of its nosedive and BKS for actually thriving in the age of e-books and general illiteracy.

With that I'm off to practice what I preach by doing something other than sit at this desk. I hear some wee footsteps roaming through the house; it may be time to unleash the tickle monster. Blood may be shed. It won't be easy on me but they violated Rule 1 of the House: there shall be NO joyful children allowed at any time. Spare the torturous ticking and spoil the child.

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