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Sally Jones
Sally Jones
Articles (580) 

Orchard Supply Off 86% in 52-Week Low - Time to Re-Imagine?

April 05, 2013 | About:

The GuruFocus 52-week low screener reveals that Orchard Supply Hardware (OSH), the Sears home and garden improvement spinoff, is off by 86.1%. OSH shares are priced at $3.89, from the high of $27.93. The 52-week low value screen shows that Sears CEO Edward Lampert is still holding on, but he did just reduce his position slightly by 0.31%, as of April 1, 2013. Listed as a 10% owner of Orchard Supply Hardware, Lampert currently holds 1,027,115 shares after the trade.

Orchard Supply Hardware (OSH) has a market cap of $23.89 million. The P/B is 9.05.

The company history paints the inception of Orchard Supply Hardware at the grassroots of the Great Depression. In 1931, 30 California farmers, mostly prune growers, formed a co-op to exert purchasing power for farm supplies. As time went by, others in the neighborhood recognized Orchard Supply as a good place to shop for things like shovels, ladders and hammers. By 1946, the cooperative had almost 2,000 members and Orchard Supply was recognized as a leading hardware store in San José.

Fast forward 65 years later: When Orchard Supply Hardware completed its spinoff from Sears Holdings Corporation in December 2011, Mark Baker, Orchard president and CEO, said: “We look forward to Orchard being an independent publicly traded company. During the past year, our team has made significant progress toward developing a differentiated home improvement retail experience. We’re implementing new customer service initiatives and merchandising strategies, and have begun transitioning our stores to a new updated and customer-friendly format that more effectively showcases our merchandise and service offerings. We believe these actions will enable us to leverage the 80-year history of the Orchard brand in order to drive long-term growth and build value for our shareholders.”

It seems like an 80-year history should count. But Orchard’s sweet beginning of organic growth from local demand and farmer kinship has been obliterated by today’s made-in-China retail race. Like the orchards that became an endless horizon of homes in the Santa Clara Valley, Orchard Supply Hardware’s retail philosophy, "Take good care of your customers and they will take good care of you" may also be lost as consumers shop hard for things made by competing retail giants with access to better-cheaper-faster manufacturing overseas.

Meanwhile, will investor genius Lampert continue making “whisper trades,” possibly backing out, inch by inch?

Orchard marketing provides a friendly, neighborhood concept that should have worked. But the visionaries did not really factor in the way real people shop today. It’s a nice story, but we as consumers no longer care if Orchard Supply was once the Dust Bowl's "Prune Palace." We jump in the car and race to the place that is closest to where we live and sure to have the selection and the best price. If going to a certain store can save us time, the real commodity, we will even spend a few more pennies without grumbling.

What will Guru Edward Lampert do next with his spinoff? Is there time to re-imagine?

Lampert’s OSH holding history:

Top investor Guru Eddie Lampert is also manager of his firm ESL Investments and one of the richest people in America.

Check out the GuruFocus special feature 52-week low screener. This special feature helps you find the stocks hitting new lows but are still held by top investor Gurus and Insiders. If billionaire Gurus own these stocks and are still increasing their positions, it means that they believe the stocks are undervalued. Researching these stocks may help you find deep valued stocks.

About the author:

Sally Jones
Sally Jones writes about Real Time Picks. She says, "I truly enjoy watching the Gurus in realtime and telling their story."

Rating: 3.2/5 (11 votes)


AlbertaSunwapta - 4 years ago    Report SPAM
Maybe Sears should buy it back.

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