Evaluating Kmart and Sears Holdings Corp (SHLD) After a Decade of Restructuring

However, if an investor adjusts these metrics to include only those properties that the companies own, Wal-Mart and Target Corporation (NYSE:TGT) see very little change, while Sears Holdings Corp (NASDAQ:SHLD) sees an increase in store sales up to $55 million, as opposed to $15.6million. This means that the company is indeed still producing efficiency returns for its investors, but through the use of a comparatively dramatic amount of leasing leverage.

Given the comparatively ugly financial situation that a cursory view of Sears Holdings Corp (NASDAQ:SHLD) has demonstrated, an investor can take this analysis a step further to determine if there is perhaps a long-term opportunity associated with the management’s pursuit of something ‘foolish’. By looking at the long-term growth and investment projects that the management teams of these companies are taking on, an investor can determine if there exists some qualitative catalyst that can still drive SHLD into the markets as a serious competitor. The table below summarizes the big actions that managers for each of these companies are taking into the year to establish growth.

Notice how it is that Wal-Mart and Target Corporation (NYSE:TGT) are investing in the development of tangible investments that will either improve the ability of customers to make purchases, reduce costs, or expand revenues? This is dramatically different than Sears’ financially-focused divestment projects, and paltry investment into small-time products and novelty infrastructure. As such, it would seem as though Sears is not only remaining uncompetitive, but still in the process of undergoing a restructuring to clean up the mess that was created by the collapse of Kmart.

Ajay Goel has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Ajay is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

The article Evaluating Kmart and Sears After a Decade of Restructuring originally appeared on Fool.com is written by Ajay Goel.

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