October 10, 2017

On Tuesday, the S&P 500 was up 0.2% and Toronto was up 0.3%.

Walmart was up 4.5% to $84.13 after announcing that it will buy back $20 billion in shares. That would represent about 8% of its shares which is quite substantial. It also announced that it expects earnings per share to rise 5% in its next fiscal year. It would seem to be the buyback that has ignited the share price. In general, I would not consider a buyback to be a very good reason to get excited about a stock unless the stock was under-valued and the buyback was a catalyst for the stock to move up to a fair value.

In Canada, the news is that Sears Canada will be closing all its stores after no buyer could be found. This is sad. It has been a long time coming.

I have not mentioned Sears too many times on this site over the years. Looking back I see that on December 19, 2012 I said: “Clothing retail in particular seems to be a vicious business. I don’t predict a strong future for Sears Canada or the Bay.” On March 4, 2012 I marveled at the “the news that Sears Canada has agreed to vacate the premises of three of its large stores and return them to the landlord in return for $170 million.” and I questioned the wisdom of whoever was paying that money.

On October 30, 2013 I noted: “Sears is selling the rights to five big store leases for $400 million. Good for them. This seems a smart move. If they can’t make much money at stores like Eaton Center in Toronto, why not grab that kind of cash?”

On January 31, 2013 I said: “I don’t have any good opinion of Sears Canada. At West Edmonton mall a week after Christmas, I walked through one of their stores at 3 p.m on A Saturday and the floors were full of mud that appeared to be left there from previous days. If they can’t even bother to clean the floors they are toast.”

Sears was no doubt in a tough business. But it also seems clear that it has been very poorly managed for years. It’s disgusting to see that current management have been paid large retention bonuses to stick around after they first filed for creditor protection a few months ago. It’s beyond me how any judge could approve that.