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Outlook: Green/Sears

IT IS HARD to know who is more to blame for the appaling undervalue that Sears has been sold for - the management, whose failure over the years both to manage the business and realise its value has been almost total, or the stock market, which has consistently refused to put a realistic break-up value on the group. Whatever the answer, there is little doubt that Philip Green and his financial backers, the Barclay brothers, have got one of the steals of the decade.

Just consider the following back-of-the-envelope calculation. The Creation credit card business is in the process of being sold for pounds 141m, which is quite a lot more than the stock market thought it was worth. All the same, the deal has been done and is presumably going through.

A year ago, Sears agreed to sell its Freemans mail order company to Littlewoods for pounds 490m, only to be blocked by the Monopolies and Mergers Commission. Freemans is worth more to Littlewoods than to anyone else, and in any case it has since slipped into loss. But even so there remain two potential buyers keen to deal. So let's say Freemans can be sold for pounds 200m. The Sears property portfolio is meanwhile conservatively valued at pounds 150m.

All this virtually covers the costs of Philip Green's bid, leaving a not insubstantial retailing business generating profits of pounds 25m a year in for next to nothing. Mr Green is clearly a brilliant wheeler-dealer, but his record of actually running and managing businesses is a good deal more chequered.

So say he sells the retail business too. Whoever named the bid vehicle January Investments Limited must have had a sense of humour, for it has just clinched one of the biggest January sales bonanzas ever. His profit on the whole transaction could be approaching pounds 150m.

So why wasn't this value recognised by the stock market? One possible answer is that the market is an imperfect judge of value. But there is a more damning one too. Investors came so much to loathe and despise this company, and its management that they refused to afford it a proper value. Belatedly, but with about as much resolve as a sleeping child, Sears has made a start on its own break-up.

Too little, too late. Sears has been Philip Green's meal ticket for far too long now. First Olympus Sports and then Shoe Express were knocked out to him at what later proved to be bargain basement prices. To have allowed a further pounds 150m of shareholder value to pass into his hands is a terrible indictment of Sir Bob Reid and the rest of the Sears board.