Credit Group sold to Citigroup for 6 billion dollars

Joined: 07 Jul 2003 Posts: 765

Sears sold its credit group to Citigroup for 6 beelliioonn dollars (said in true Dr. Evil style). Stock up considerably in after hours trading. What's next?

Joined: 07 Jul 2003 Posts: 765

Thats 6 billion dollars pre-tax profit which I guess equates to about 1.5 billion dollars of cash. Also will receive a yearly amount from Citigroup for the next 10 years as well if performance incentives are reached.

Here is a link to Sears Investor Relations Page

http://www.corporate-ir.net/ireye/ir_site.zhtml?ticker=S&script=410&layout=7&item_id=431540

Joined: 04 Jul 2003 Posts: 1416 Location: Indianapolis, IN

Oh wow ! - I guess my son will be looking for a new job in the very near future - I will call him this evening and see if he has received any emails telling him when he will no longer be needed - I hope this is not the case

MrsDD

Joined: 07 Jul 2003 Posts: 1037 Location: Formerly 3333

Folks.... anyway you slice it, this is good news.

We practically eliminate our heavy debt burdon, collect cash that will allow us to take necessary steps to recharge our Retail business, and most of all, return cash to our shareholders.

As I write this, our stock is closing in on $42 in after hours trading.... up nearly $7 dollars from opening this morning.

I'm sure there will be those who will dig and find something negative but I think this is good news for Sears and our shareholders.

"Footie"

Joined: 04 Jul 2003 Posts: 477

Well sear sold its credit. Positves: Can help eliminate much of its current liabilities (debt that is) and some long term as well.

Negatives: Credit business was an estimated 60 percent of our total revenues, so it remains to be seen how we are going to make up for that 60 percent revenue stream.

We will be getting estimated 200 milllion dollars a year in revenues but that is chump change to what we use to get. We need to focus on putting stock in stores on a constant basis if we are to make up for that loss of revenue.

Stock by years end will close pretty decently in my opinion, but the question of long-term goals remain. And no footie i am not being negative i am being realistic in determining how sears will make up for its estimated 60 percent revenue stream in the long run.

Joined: 11 Jul 2003 Posts: 273

How they plan to make it up? More pressure for PA's that what.. lol.. but anyways does anyone know what kind of ties they'll still have to the credit business though? I mean their projections is to earn another 4 or so billion with the 10 year marketing contract within this deal.. The poor business stragedies in the past are what cost them and forced them to sell.. I mean the regular Sears charge, your normal 21.9% interest grabber was the most popular credit card out there as for as retail stores go.. their standards to get 'em were very high, which I mean they could of been a little bit more open, but still, this saved them and made them several millions and billions throughout the years. Then they launch the mastercard full effect.. which is a great idea, but the credit limits they give some people are just insane.. people getting way more credit then they are capable of handling, very easy standards compared to the regular sears card.. causing them to have to sell.. Now if the current Hoffman guru wouldn't of made this so easy, and kept some higher standards, instead of replacing people's $900 credit line sears cards with $7000 mastercards, this wouldn't of been an issue.. They would be making lots of money and not had to sell the credit if these fools wouldn't of messed things up.. Sure it helps the current solution, but it's something that the company should of never had to face with more intelligent people at the top.. Thats the facts of life.. Even many managers who work throughout Sears that I've talked with agree with me on this.. So it's a big transaction that helps the company out temporarily.. but I still wonder the ties they have.. because this long-term really does hurt the profitability.. I'm being realistic here too.. and ever since Martinez stepped down, they've ran this company in the ground.. Not that I was a supporter of him either, but things were better off then they are now thats for sure.. Thats the way I see things..

Joined: 04 Jul 2003 Posts: 1416 Location: Indianapolis, IN

Joined: 04 Jul 2003 Posts: 477

Yes but that is how it always works. Top people always benifit the most thats why we have rich people and poor people. I dont mean to sound synical but its true. The only way to change things is to make a stand and if you dont well then you must not mind letting someone take all the credit for your hard earned work. And do you guys really think they would sell the card to a company and not continue to force credit quotas on associates?

Joined: 04 Jul 2003 Posts: 1337 Location: The Collective

Joined: 04 Jul 2003 Posts: 477

Yes they are not indirectly for the execs but it does allow them to have more money to give them more bonuses at year end. It also can help them pay off company debt and remodel the stores as well, but honestly do you think our execs wont take a nice bonus as a good pat on the back for doing a good job. And bodyguard what are your thoughts on the selling of credit. Do you think in the long run it will be a healthy and wise choice for sears to make since an estimated 60 percent of total revenues comes from the credit side?

Joined: 15 Jul 2003 Posts: 32 Location: Missouri

If we have to back off on the zero % financing..It's curtains...

Joined: 10 Jul 2003 Posts: 89 Location: Texas

Too bad we weren't able to archive the postings from RW as we could go back and point out all the times that this very move (selling assets (or in this case asset turned liability) was predicted. It is unbelievable that Sears could have so mismanaged that end of the business that they were forced to sell it to cut their losses and raise much needed capital to bolster the stock. But this move is a quick fix and one designed to generate cash flow...most probably the basis on which Lacy will pay himself a huge bonus. So, what is left? As I see it, about 800 plus stores located in expensive mall locations in a bad economy with an ever shrinking assortment of product, an aging customer base and employees that have been bruised and battered from the endless changes that are the same old programs presented in new and unexciting colors. It won't be long before more cash is needed and the next round of sell-offs begins. What will it be the next time? The Kenmore brand? Or maybe Craftsman Tools? According to Lacy, success is always just around the next corner. Well, how many corners does he have to turn before he realizes he is just chasing his own tail?

Joined: 15 Jul 2003 Posts: 32 Location: Missouri

Amen...... Brother........Well said.

Posted: Wed Jul 16, 2003 4:04 am Post subject:

now i wonder...how big is that shithead lacy's bonus gonna be from this sale? 10mil, 20 mil?

he did this to make himself money...this is the absolute downfall of the company...we are finished

Joined: 04 Jul 2003 Posts: 1337 Location: The Collective

Joined: 05 Jul 2003 Posts: 312

Does this mean we will not have to push for credit apps. anymore?
Rock on!

Now we'll have to sell merchandise to survive. Shocked

Joined: 04 Jul 2003 Posts: 1337 Location: The Collective

I hate to say it but I am sure we will still push credit....Shittybank will pay us for new accounts!

Joined: 04 Jul 2003 Posts: 422 Location: Woosta

Joined: 11 Jul 2003 Posts: 132 Location: Midwest, IN

you bet they will, or some sort of incentive given to sears for opening new accounts, but that money given to associates for opening new accounts... I wonder where that will go, think it will be gone (reach 5 apps in a month get $10 plus $2 for each extra opened)

Joined: 04 Jul 2003 Posts: 2110

Joined: 07 Jul 2003 Posts: 765

The following info comes from Moody's...a research firm that is widely respected for rating debt that a company currently has outstanding. Most companies rely on debt to finance ongoing business expenses. The lower the rating of the debt, the more Sears must pay to the debtholders. Selling our credit unit is definitely good for the company today. It does give us much needed cash. However, if you read the analysis below, there is some question whether Sears can be successful as a stand-alone retailer (without the profit from the credit unit). The future of the company will now solely be determined by what we sell. Now, if only we can deliver on the Take It Home Today or Next Day Delivery Promise.

"The ratings confirmation is based on Moody's assessment that, although Sears is selling its most profitable business and a valuable source of cash flow generation and earnings generation, the proceeds will be utilized to significantly strengthen the company's capital structure and financial flexibility as it proceeds with its important multi-year efforts to reposition its retail operations.

The ratings confirmation assumes

(1) that Sears will maintain a conservative capital structure, as represented by its intention of carrying $1.5 billion of funded domestic debt (net of cash reserves held for future retirement of its remaining outstanding debt);

(2) that Sears will continue to maintain its leading position in hard lines despite the increasingly competitive environment;

(3) that the chain-wide rollout of the Lands' End brand will improve performance of the soft lines business; and

(4) that Sears will successfully complete its retail repositioning efforts.

The negative rating outlook incorporates

(1) the challenge Sears faces as it continues with its repositioning efforts as a retail-only franchise in the increasingly competitive environment, and in particular the pressure that its apparel offerings face from many fronts;

(2) intense competition from a variety of traditional and newer players in the hard lines segment, with potential for negative impact on the historically solid and predictable cash flow generated by this segment, which provides valuable support as it implements merchandise and other initiatives to attract a higher income customer to its soft lines offerings; and

(3) the loss of the traditionally predictable cash flow of the credit operation. Prospectively, Sears' ratings could be lowered if its debt protection measures deteriorate as a result of a more aggressive financial posture or weaker than anticipated cash flow generation due to challenges in repositioning its soft lines business or intensifying competition in hard lines.

Sears' liquidity is solid, with 100 percent back-up for its unsecured commercial paper borrowings in the form of committed bank facilities and its portfolio of short term, high quality investments.

However, although Moody's takes some comfort from the range of funding sources available to Sears, including its significant portfolio of short term investments, the lack of any multi-year component to its current bank facility materially weakens, in our view, the overall quality of its alternate liquidity arrangements."

Joined: 04 Jul 2003 Posts: 34

This sell off worries me. Do any of you rember when Ed Brennon was CEO Sears, And His brother was CEO of Wards.
Wards Sold off all of their credit to become dept free.
Then the retail stores had to start making a profit.
This didn't happen as planned and within three yaers our biggest competitor at the time closed its doors. The only ones coming out of the deal spelling like a rose where the top level people.
the retail workers at the store level where the ones that got shafted the hardest. All of this Reminds me of other retailers that have done the same thing in the past for example. Others than Wards, Peoples-a clothing store. Venture,Pay-n-Pac. ect.
All of these stores tryed to rely on their core retail selling in a hope to turn the store around. For these it did not happen.
If we are a very liquid company , would it not be ripe for a buy out also? Just my 2 cents. Sahib.

Joined: 04 Jul 2003 Posts: 933 Location: roaming...

Once the core is spoken for, the flesh has to be immediately devoured, or it shall rot. Sorry to be so blunt, but it is the truth, it is nature. Core a peach for example, see if it lasts a day afterwards.

After the sale of its credit division, Sears is in a position of either being acquired by a competitor, or ..... jumping over the Grand Canyon.

I'm slightly distraught. Can you tell?

Joined: 05 Jul 2003 Posts: 312

Well you know as long as Alan gets his Fricken Bonus thats all that matters.....

Right Alan? Evil or Very Mad

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