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As Sears shutters more stores, these retailers could see gains

CNBC logo CNBC 2/12/2018 Lauren Thomas

As Sears Holdings shutters more of its department stores under the Sears and Kmart banners, three retailers are poised to gain the most of those lost sales, according to UBS analyst Michael Lasser.

Though Sears' revenue has fallen sharply in recent years, the company is still on track to generate more than $11 billion in sales of hard and soft goods (i.e. electronics, appliances and clothing) for fiscal 2017, Lasser pointed out. That's a big chunk of change up for grabs.

Taken together, Home Depot, Lowe's and Best Buy should capture a majority of sales of appliances, home improvement items and electronics, UBS found, as Sears moves out of the mall and other strip center locations. Appliances alone are estimated to bring in about $3.5 billion annually for Sears, which has also lost share to J.C. Penney and Costco in this category.

The firm found that about 80 percent of Sears' U.S. stores today are within a 15-minute drive of either a Home Depot, Lowe's and/or Best Buy location. Some appliance sales could shift to Amazon, Lasser noted, but he doesn't anticipate that category to make a drastic shift to the internet.

If Sears closes all its stores (roughly 1,100 as of the end of the fiscal third quarter), Best Buy's earnings per share could jump by 10 percent, Lowe's by 4 percent, and Home Depot by 2 percent, according to UBS.

Meanwhile, in the sporting goods category, Dick's Sporting GoodsDKS could capture as much as 25 percent of the $400 million in sales of athletic gear that's sold at Sears, the firm added. Other winners here include Academy Sports Outdoors and Bass Pro Shops, UBS said.

"With interest rates set to rise & corporate tax reform not benefiting SHLD (as it's not profitable), we think its woes will only accelerate going forward," Lasser said about the retailer's future. But that only means, "there's meaningful share up for grabs for other players."

A representative from Sears didn't immediately respond to CNBC's request for comment on UBS' report.

Looking to 2018, Sears has said it's focused on growing sales of mattresses and appliances, in particular, and could look to monetize assets such as Sears Home Services, and the Kenmore and DieHard brands.

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