Credit Suisse on Sears Holdings and AutoZone…..What?

So, Credit Suisse (CS) today had a piece on Sears today that left me shaking my head. Thanks to Jud for the tip..

The post said:
“CS: SEARS ISN’T AUTOZONE
Sears Holdings (SHLD) has been trading like a retailer with a pulse lately, something that its fundamentals have argued against. Despite steadily declining sales and continued investor frustration with the merchandising initiatives at the retailer – Credit Suisse called it ”one of the most vulnerable companies in the sector” Wednesday – the stock has traded up about 2% over the last month, a period in which the average retail stock has fallen about 8%. Credit Suisse suggested the outperformance reflected some misplaced expectation on the part of investors that majority holder Eddie Lampert would clone the successful strategy of another of his retail holdings – AutoZone (AZO) – and graft that onto the Sears’ frame. AutoZone recently announced plans to leverage itself up to bolster its balance sheet, while increasing its share repurchase plan. However, Credit Suisse poo-poohed the idea that Sears would follow suit. Sears’ business is much more seasonal than AutoZone’s – with the bulk of sales hitting in the fourth quarter of the year – to make such a balance-sheet move functional. Investors have been disabused of the real-estate plays that could be engineered at Sears, which owns many of the sites where its stores are located. However, the waning value of the real estate market has made the property holdings less attractive. Sears has traded down about 2%.”

Okay. I think we pretty much know that Sears isn’t Autozone (AZO). Although, Sears Automotive, well, pretty much is but lets not dwell on that.

I think CS just felt the need to write about Sears. I mean Sears trades either up or down 2% on almost every trading day so the fact it has done that in the past month doesn’t even qualify as noteworthy much less newsworthy.

The AutoZone / Sears talk has nothing to do about Sears following the Autozone lead in leveraging up the balance sheet. It has to do with the majority shareholder of both, Eddie Lampert. The buzz is perhaps Sears Auto and Autozone get into biz together in some form. If one looks at that, there is a tremendous possibility and synergies. Lampert wants to expand his brand presence and maybe we find DieHard batteries and Craftsmen tools in Autozone? Maybe AutoZone expands by taking over some Sears Auto locations?

To be honest, I have yet to hear anyone talk about what CS claimed (Sears following Autozone by leveraging). I have heard a bunch about the auto synergies and that does make sense.

Chalk it up to a slow day at Credit Suisse?

Disclosure (“none” means no position):Long Sears, None