Struggling Sears Suggests That Auto Centers May Be Next Spinoff, Aims To Exit Canada

Every Spring in Chicago gives birth to new hope that this year will be different.  It is rarely long, however, before hopes for this year are dashed and talk shifts to a focus on rebuilding for next year.  We are not talking about the Cubs, but rather about iconic Chicago retailer Sears Holdings(SHLD).  Once again, Sears posted a miserable quarter this morning.  Even squinting, a glimmer of hope is not to be found in this report.  Aside from the dismal performance of brick & mortar, the company’s mismanagement of its appliance and home services units, has lead these once dominant divisions into precipitous decline.

Amidst this, the company’s CFO, Rob Schriesheim, gave a cryptic update on the attempts to dispose of the Sears Auto Center business.

As we have previously disclosed, we are continuing to evaluate strategic alternatives for our Sears Auto Center business. We have had discussions with third parties regarding a variety of opportunities, including partnership. We are focused on either receiving adequate value from a third party or otherwise positioning the business to allow Sears Holdings’ shareholders to benefit from what we believe will be an improvement in the performance of this business.”

It sounds to like us that Mr. Schriesheim is conveying a lack of interested buyers and telegraphing that the company will soon spin off this division as it has with Lands End(LE), Sears Hometown and Outlet Stores(SHOS), and the late Orchard Supply Hardware. And going further back, Allstate, H&R Block, and Dean Witter(and Discover).

The company has also announced that it plans to sell off its controlling interest in Sears Canada(SEARF). The company previously spun part of its stake off to shareholders. Unfortunately for the company, there are few potential acquirers for the struggling Canadian retailer, especially since Bill Ackman, who previously successfully fought the company’s attempt to acquire all of Sears Canada, has sworn off retail after his disastrous dalliances with J.C. Penney(JCP) and Target(TGT). And Target’s own disastrous Canadian experiment doesn’t help matters.

Whether anyone will make money here(besides the lawyers, they always make money) is unclear, but one thing is almost certain- there will be more spins to come from Sears Holdings.

Disclosure: The author owns shares in JCP, but no other stock mentioned