Remains American Sears a retailer or is it becoming a realty seller?
It seems that there is again high noon in the American retail business, not that shoppers are shop until they drop, but the ownership of retail companies is changing fast
As TextileFuture has reported before, Sears the department store chain is struggling along because of its ownership trying to alter the company’s value in turning the company into a realty company. The reasoning behind this is simple. Baker Street Capital Management, owning 1.4 % of Sears estimated that owned Sears real estate should be worth over USD 8.6 billion but the company’s total value is actually USD 5.9 billion. Sears top 350 owned sites and top 50 leases could be assets easy to sell and at a good price, because high quality malls are difficult to come by. They are worth around USD 7.3 billion translating into USD 69 per share and taking the company’s brands, such as Kenmore and Lands’ End, Baker Street reckons that the company is worth 13.9 billion or USD 131 a share.
When the report was published, Sears’ shares advanced 25 % to around USD 56. The next thing to happen was an analysis by Credit Suisse declaring that Baker Street overvalued Sears real estate value and putting a too high price tag on the entire company.
Baker Street argues that the top 350 stores of Sears are worth USD 98 per square foot. J.C. Penney and based upon an expertise of Cushman & Wakefield (real estate specialist in retailing) their best locations are valued at USD 55 a square foot.
In other words, Baker Street might just have tried to push up the share value of Sears, and one wonders what this is leading to?