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When Sears Goes, Who Gets The Spoils?

Janney Montgomery Scott retail analyst David Strasser raised that question today in a research note, with the emphasis on when, rather than if.

Based on the company’s current circumstances ($337 million loss in 2013, fourth-quarter sales declines of $1.7 billion, “imploding” traffic, limited turnaround initiatives), he concluded that it is not premature to think about a post-Sears world and where its $36 billion in revenue will wind up.

Some will simply go away, he noted. But a large portion of its appliance business, which still commands more than a quarter of the market, will transfer to a handful of national, regional and independent chains, based on Circuit City’s exit from white goods.

The biggest majap beneficiary, he argued, will be Best Buy, which could conceivably pick up nearly a third of Sears’ share, or about $2 billion in sales, roughly doubling its own appliance share to 15 percent.

Another third of Sears’ white-goods share could go to hhgregg and several independent dealers, whose higher average selling prices are attractive to manufacturers, Strasser observed.

The remainder would be absorbed by The Home Depot and Lowe’s. The former will likely benefit more from expanding its appliance assortment and square footage, while the latter will continue to build upon its already robust share, Strasser said.

But regardless of who gets the spoils, he believes that vendors are presently “keeping a watchful eye on a retailer that is no longer critical to their business.”