Can Real Estate Play Save Sears?
Shares of Sears Holdings' surged by 31% and over $1B in value on Friday when the company annoucned it would sell 200 to 300 stores to a REIT and lease back the locations. Those gains came despite the arthritic retailer being on a course to lose $3B over the next two years. And some analysts are wary of CEO Edward Lampert's "financial engineering" tactics like the real estate gamble. "Retailing is a graveyard for bricks-and-mortar shops that cannot adapt to the internet," Steven Davidoff Solomon writes in the New York Times today, pinpointing the storied chain's lack of web savvy as the main reason behind its likely demise. He even adds that the struggling JC Penney has been swifter to modernize. As for the REIT news, Solomon wonders "how value will be created if shareholders pay full price for these stores and the money is burned up" in Sears' death spiral.