Sears spirals toward oblivion

CEO Eddie Lampert can't apologize his way to growth any longer. His gasping retailer is now racing J.C. Penney to irrelevance.

By Jonathan Berr May 24, 2013 12:18PM
Sears store on in Milford, Connecticut Spencer Platt/Getty ImagesIf self-flagellation were an Olympic sport, Sears Holdings (SHLD) CEO and top shareholder Eddie Lampert would surely be a gold medalist.

Lampert has yet again apologized for quarterly results that were dreadful, even by the low standards of Sears. Lampert called them "unacceptable." Although that candor seems remarkable for a CEO, keep in mind that he has been saying more or less the same thing for years. It's easy to see why.

The venerable retailer lost $279 million, or $2.63 per share, versus net income of $189 million, or $1.78 per share, a year earlier. Revenue plunged by 9% to $8.5 billion. Same-store sales, a key metric of performance at stores open for at least a year, tumbled 3.6%. 

Wall Street analysts had expected a loss of 60 cents per share on revenue of $8.74 billion. As earnings misses go, this one is gargantuan. Shares of Sears plummeted in early trading Friday, falling 14% to just below $50.

Gap (GPS) and Abercrombie & Fitch (ANF) also reported disappointing results on cooler-than-expected weather (an increasingly common theme among retailers), but Sears' struggles have been going on for years and seem to be accelerating. Lampert, who had no retail management experience, took over as CEO earlier this year from Lou D'Ambrosio, who resigned to take care of an ill family member.

"A company of our size and with our assets should be generating a significant profit," Lampert told analysts during the earnings conference call, adding that issues like weather have an "impact" on Sears. "But even with that impact, we should be doing a lot better than we are."

Lampert certainly can talk the talk, but investors have grown impatient waiting for the company's deeds to match his words.

Like J.C. Penney (JCP), Sears lacks a coherent brand identity. No one seems to know why anyone would shop at either chain. Now both are in a race toward irrelevancy that shows no signs of slowing. The only question is: Which of these venerable brands will wind up on the scrap heap first?

Jonathan Berr can't remember the last time he was in a Sears store. He doesn't own shares of the listed stocks. Follow him on Twitter @jdberr.

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May 24, 2013 1:37PM
I worked at Sears from 2007 until 2012. That was my Senior year of high school and all four years of college. I worked in the Tools/Lawn & Garden/Fitness requirement and was given some managerial responsibility/privileges. One time this customer came in to return a tool without a receipt and we technically had a no return without a receipt policy (this wasn't for the usual warranty exchange; it was for a refund). The cashier rightly declined it but I came over to talk to the customer (with all intentions on taking the tool back because the cashier did tell me that it was Craftsman and new in the box and so I knew that I could sell it anyways and so why tick off a customer?). I saw the tool and was shocked. It was a circular saw that we carried (same model number and everything) but the box looked old and it was the old style packaging (back when Craftsman used a lot of blue on their boxes instead of red). He said that he purchased it 10 years ago and never got around to opening it. I gladly took that tool back because I knew that I'd be able to sell it to the first person that walked through the door. A customer came in later and I showed him that saw and a current saw (same model number and everything). The current saw was lightweight because it was made out of plastic. The old saw was made out of metal. The old saw was made in the USA and the new one was made in China. Even the blade that the new one came with didn't seem as good. I sold that thing instantly as I knew that I would. That's the main issue with Sears; they sell junk now. I'm not even sure how the tool department makes any money. There was a 33 gallon compressor that had habitual leaking problems. I kept track of the sales of that for a two month period and I forgot the exact number but it was more than a third of them were getting returned because they leaked and that was around $350 a pop. Several of the other compressors got returned a lot and many of the power tools had high percentages too. How can you make money when a third of your product is returned because it's defective?
May 24, 2013 12:54PM
I remember when the Sears Christmas catalog was something the entire family waited for with anxious anticipation. Times have certainly changed and I'm not so sure it's for the better.
May 24, 2013 12:48PM
Sears should do away with all of the stuff except for Craftsman tools and lawn & garden equipment, grills and appliances.  Then change the name to Craftsman.  You sometimes have to downsize and streamline to save the company (or what is left of it).
May 24, 2013 12:38PM

I think there are two tiers to the market right now.  There is the $10 shirt/$25 jeans market, then there is the $50+ shirt/$100+ jeans market.  Sears and JC Penny's seem to fall in the gap.  Says some sad things about the state of the middle class as a whole.

May 24, 2013 1:03PM
In the future case study over "branding", Sears will be a tier class everyone will want to hear lectures about. Literally coming into this phony marketing era, Sears and it's trustworthy sub-brands like Craftsman and Kenmore were well-regarded. When those stalwarts were swapped out for trash from China, they literally drove themselves into an "anti-branding" tragedy. It doesn't matter what brand is on the shelves, the store itself is branded as a cheap knock-off box.
May 24, 2013 12:36PM
I haven't been in a Sears, since last year when I was applying for a job.  My parents haven't been in a Sears in probably the last ten years.  My grandmother hasn't been in a Sears since I was probably around 12-13 (when she made me go with her).  Both my parents and my grandmother have been shopping for their home appliances and other house related items elsewhere.  If Sears can't win back the generation(s) that used to utilize them the most, Sears is doomed.
May 24, 2013 1:00PM

Get rid of EDDIE LAMPERT and all of his top staff and maybe it will survive.

He ruined a great company.

May 24, 2013 2:08PM

Somebody please tell me how Radio Shack is still around? 

May 24, 2013 12:54PM

 There appliances are becoming junk you can't count on them to last more than a couple years, their electronics section has become a joke. Store set up is a futile maze with no walk ways through one department to another. And mens clothing looks like your in a walmart most of the time catering to the low income at high prices. I don't see them saving themselves because they haven't the insight to do what they need to a one time giant is reduced to nothing due to bad management and its the workers that are always blamed in this country.


May 24, 2013 12:45PM

You need to go back to the way Sears used to be.  Hype up your website and start sending out some catalogs.  Sears had a terrific catalog ordering system, when I was young.  The store(s) were performing much better back than now.  Same thing with JCPenney,  got rid of their catalog(s) and now their struggling too.  Create website incentives for customers to want to order from you.

May 24, 2013 1:05PM

Instead of selling regular style work clothes and shoes, Sears tries to hard to get the hip-hop crowd in a suburban mall. Try to find anything over size "L", good luck. Their cousin K-Mart had one store out of several that even had the bigger sizes.

 Try selling to people, not images.

May 24, 2013 1:32PM
I believe its store policy and customer services that made Sears unpopular.  Customer services went down about 10 folds.  Its not just a price customer think about when shopping..
May 24, 2013 1:26PM
I do not ever plan to purchase another Sears/Kenmore applliance.  The microwave/convection oven problem is the last straw.  The light bulb burned out.  To purchase it from Sears would cost $17.00.  In addition we'd have to drive across town and have a tech replace it because the screws won't come out.  However even if we could get to the bulb to change it ourselves there are warnings stating NOT to do so because of the potentially fatal amount of electrical charge stored under the housing where the bulb is hidden.  This is absolutely nuts to create a situation where consumers are forced to pay $17 plus at least an hour of tech time (probably around $40) to change a freaking light bulb.  Sears can fall off the face of the earth and we will not miss them at all.
May 24, 2013 1:15PM
Yep, I think Sears is on the mat, headed for becoming  defunct.  In the army in the early 60s in W. Germany for 30 months I'd order from a Sears catalog.  Sometimes I couldn't find what I wanted in a base PX.  Up to 40 years ago I think one out of two adults in the U.S.  would shop at a Sears store at least once a week. 
May 24, 2013 12:59PM
I only go to time evry three years to replace a craftsman tool that broken...i like that feature of sears.
May 24, 2013 12:51PM
I had an electric range from Sears. It needed a timer. The cost of the timer was about a hundred dollars more than another new range from another store. Let them go out of business. They deserve it.
May 24, 2013 1:09PM
personally the sears stores that I shop at- about 3 close by to me- I have no problem with. i'm a levis jean and casual shirt kind of guy and the store is always fully stocked and the prices are the lowest compared to the other big chain stores. not sure about the other dept. sections but I hope their able to stay afloat.
May 24, 2013 2:01PM

....competition is hurting both JCP and Sears..........


Like the auto industry which was dominated by the domestics through the 70's....then entered Toyota, Nissan, Hyundai, Kia, etc. In the 60's, GM had 65% market they're under 20%.


Same story in retailing - Sears and JCP supplied middle america for decades....then came along Target, Wal-Mart, Kohls, Belks, etc. Now - many of the shoppers who used to patronize go to Target for just about everything in household items and buy their clothing at Kohl's. I know, I do!


If I want higher quality garments, I then shop at Macy's. If I need home improvement items, garden items....then off to Lowe's or Home Depot. Electronics, TV;s etc. ....we look at Best Buy and then buy the items online at Amazon or New Egg. 


Sears can no longer compete with these specialty chains as 40 years ago...they were the only game in they are not!! I have very fond memories of Sears, Roebuck and Co. and worked there part-time in high school. But it appears their longevity is now short-lived.


May 24, 2013 1:24PM
Lands' End quality has also become inferior since being taken over by Sears.  I hope they survive and go back to what they once used to be, if and when Sears collapses.
May 24, 2013 12:56PM
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