Sears sells off its most profitable stores

Facing heavy losses, the company has sold nearly a dozen stores in the last year and a half.

By InvestorPlace Oct 9, 2013 12:17PM
Sears store on in Milford, Connecticut Spencer Platt/Getty ImagesBy Christopher Freeburn


iplogoA struggling discount retailer is shedding stores in a bid to boost its financial position.


Sears (SHLD) has sold off almost a dozen stores over the past year and a half. The stores, which are among the retailer's most profitable outlets, are scattered across the U.S. and Canada. There are 2,000 Sears and Kmart stores in the U.S. The company also operates 148 Sears locations in Canada, The Wall Street Journal notes.


Property developers say it is unusual for retailers to sell high-performing stores, instead of renovating them.


A representative of Sears told The Journal that the store sales generated enough revenue to compensate for the loss of operating income. The spokesperson also noted that the company has shuttered 300 Sears and Kmart locations since 2010, with just 2% of those performing at or above expectations.


Falling store revenue has hit Sears hard in recent years. The company has lost more than $4 billion dollars in just two years, prompting the retailer to look to asset sales to raise $500 million in needed cash. Sears has raised $277 million from selling stores and leases through the second quarter of this year.


Once the leader in appliance sales, Sears has lost significant ground to rivals including Home Depot (HD) and Lowes (LOW).


Shares of Sears fell more than 1% in Wednesday morning trading.


More from InvestorPlace

215Comments
Oct 9, 2013 2:14PM
avatar
Sears is merely reaping what it sowed. The "hot shot" new managers started this new program of "fixing that which isn't broken" so they could increase their bottom line. I worked for Sears back then and saw the insanity up close and personally. They got rid of their professional sales staff and replaced them with clerks who didn't know anything about washers and dryers and big ticket electronics. They also started slashing commissions because, according to our district manager, "the sales people were making too much money". Sears management obviously missed the memo that, if your sales people are making a lot of money, so is the store. This has come home to roost some twenty years. It proves conclusively that, if you try hard enough and are greedy enough, kick your faithful employees to the curb and in the teeth (I've seen both), and refuse to keep principals that work, you can destroy a company. Works every time.
Oct 9, 2013 1:42PM
avatar
It might be the beginning of the end for the tired old retailer.
I wish they would keep their tool and outdoor store departments alive somehow.
And I doubt that putting Spanish as the first language on their signs helps them much with their old customer base.

Oct 9, 2013 2:24PM
avatar
Looks like Montgomery Ward will soon have company in the  Hallowed Halls of History. Another example of a retail take over where a company's historic focus was ignored and the CEO  and board members tried to take them upscale and completely devastated their loyal customer base.  J.C. Penny anyone?  I was a little kid my dad took me to Sears when he bought tools. Sears stood behind their tools with a lifetime replacement guarantee. If the tool breaks, which seldom happened because they were high quality, you brought it back and it was replaced new, with no questions asked. As an adult I continued to shop Sears because of that reliability and product integrity. Now they replace them in some instances with reconditioned tools, that break again shortly after you get them home. It is also necessary to haggle with the clerk to make the exchange having had them question me on why the tool broke. The quality and pride of the Craftsman name no longer means what it use to in the past. This may seem insignificant, but not only did quality of  their line of tools deteriorate, so did peoples perception of the Sears brand as a whole was lowered as a result. Craftsman quality was synonymous with confidence in Sears merchandise collectively. This is just one example of several missteps management took that has led the company to its current dilemma. New management completely lost sight of what commanded customer loyalty historically. They failed to realize quality at moderate prices transcends the generations.
Oct 9, 2013 2:21PM
avatar
when they started paying ganster rappers to advertise, I decided I was not going to pay for people who's endorsements I don't respect.
Oct 9, 2013 1:55PM
avatar
When something is working why change it.  You get new people in charge and all they want to do is make more money at the expense of the consumer and the employees.  Many companies have stopped selling U.S. made products to make a better profit.  You get lower quality and hurt the U.S. workers.  Go back to the old values of honesty and caring for the employees and consumers.  I do not know if Sears/KMart are like this, but many are.
Oct 9, 2013 2:16PM
avatar
The reason they are failing is there cheap tools. I have my dads craftsman tools from the early 60s and they still perform like new. Recently I had a box end ratchet wrench break, I took it to sears to exchange since they guarantee there tools for life. The tool they gave me in exchange was a cheap chinese POS that no doubt will break in the near future. They also tried to make me pay sales tax which I did not have to once speaking to the manager. Life time warranty's do not carry an additional sales tax in California.
Oct 9, 2013 2:36PM
avatar
Kmart sux. One checkout open...and 4 stooges standing around chatting. Been all over midwest, west and south. Same old broken record at dirty stores, lack of competent help....
Oct 9, 2013 2:45PM
avatar

i have to agree with all...i used to go to sears and use sears exclusively for major appliances

in home repairs etc.  when i went into sears last year for a  new washing machine the

person waiting on me could not answer my questions about the washing machine and

probably couldn't have cared less.  i should have known better since  i called on the home repair number once and got someone in india - here is a major reason for sears failing-who did not understand that i needed help with a chain link fence for my yard.  before i knew it, i was talkiing to someone in the jewelery department,  i guess because of the word chain. we all know they are

working off a script over there in india so they look for the nearest word or phrase......  so

sad. too bad.  taking the catalogs away too was a terrible mistake.  i am old and do not possess a computer to shop from.  bad sears, bad bad bad

Oct 9, 2013 2:37PM
avatar
The beginning of the end of SEARS began many years ago, when they decided to get into the Financial Services business (Discover Card).  That is the time that they also decided to back off of commissions for sales staff, and to start seeking cheaper (in the negative sense) products to sell, and then they tried to move "upmarket".....all of this only resulted in alienating their customer base AND their own employees.  This company is doomed due to their own greed and stupidity.  The sooner they just divest and dissolve, the better.  I haven't been into a SEARS store for nearly thirty years.  That's when they decided to screw one of their best customers (me).
Oct 9, 2013 2:56PM
avatar

I agree with several postings, bring back the commissioned, educated sales personnel for the larger items, go back to making good old American Craftsmen tools, stand behind their product and for goodness sakes stop buying clothes from the Kardashians.  People do not want to wear clothes that show every bump and bulge.  As for K-Mart....you have 4 or more registers, open the damn things up and clean the stores.

Oct 9, 2013 1:50PM
avatar

I know I am not a CEO but common sense tells me that selling your most profitable stores isnt a good way to stay in business.

 

Then again like I said I am not a CEO and they supposedly know what is best for the companies they run because they have been in high management positions for years.

Oct 9, 2013 2:35PM
avatar
I am afraid as far as Sears and K-Mart go , you can stick a fork in them , they're done . Craftsman tools etc will become "online" products , or marketed to other retailers . They just aren't competitive anymore , another case of days gone by .
Oct 9, 2013 2:44PM
avatar

Worked for Sears from 1971 to 1993, when my store closed.  I was downsized out of a job.  Arthur Martinez was CEO then and he started the downward spiral.  I go into a Sears Store now and I am shocked that they are still opened, since no one is in the store.  They have lost market share year after year because they don't compete.  They must not want to complete because they have walked away from business and business, instead of trying to fix what is broken.  Can't make money in catalog - walk away from the business.  Can't make money in home improvement - walk away from the business.  Can't make money in furniture - walk away from the business.  Can't make money in appliance service - walk away from the business.  Need I go on?  There is no fight left in them!!!!!  Rape the company and take your money.  It's easier that way.  Read "Catalogs and Counters" to see them in their prime.  But I doubt that the current management ever even heard of the book!

Oct 9, 2013 2:40PM
avatar
It's only 2000 stores so employee wise 2000 stores X 50 employees = 100,000 jobs.

This must go hand in hand with how the economy is booming...right?

Didn't I just hear some guy bragging on TV about this?
Oct 9, 2013 2:26PM
avatar

Sears needs some newness. It feels old and past it's time. Their tools are too expensive also. Also who wants to wait weeks for an appliance when you can get it the same day and even have it installed for free.

 

As for Kmart all it is, is a upper scale dollar store. 

Oct 9, 2013 2:51PM
avatar
SEARS should really go back in time.....and look at what they were doing in, oh 1965.  Excellent customer service provided with quality products that their customer base wanted, at a reasonable price.  Their catalog sales were a huge portion of their business, which today could be done on the internet.  They seriously need to rethink their strategies, because what they have been doing the past thirty years has clearly not been working.  They screwed their own employees (you know, the people who are actually SELLING the products to customers) AND they screwed their customers (replacing good products with cheap crap, then tacking on a "Name" and raising the price - Martha Stewart?!?!).
Oct 9, 2013 2:33PM
avatar

Sears is about to go under; my own opinion, based on past experience. Long ago, and light years away, I worked for Carter Hawley Hales stores. The largest retail conglomerate of its day.

 

Carter Hawley Hale Stores began selling property in the late 1970's. The reason was, "We are in the retail business, not real estate." A-hem, a-hem...

 

But if there weren't hard times, why sell valuable property? Although some of its store holdings, like Neiman Marcus, continued on under new ownership, Carter Hawley Hale is no more.

Oct 9, 2013 2:10PM
avatar
Based on my experience with Sears years ago, I am surprised that they are still in business at all.  The WORST customer service that you can imagine.  I only wish them bad things.
Oct 9, 2013 4:37PM
avatar
I had a service appointment for my Washer & Dryer - set it up for a Saturday and had to wait FOUR WEEKS for a Saturday.  On Friday night i get home and they have left a message at my home (which ISN'T the number they were given) telling me that the appointment has been postponed.  i call them - get someone overseas who cannot understand english.  I tell her i can ONLY have a Saturday appt, which is why i set it up FOUR WEEKS in advance.  Her response - I will send someone on Tuesday" - again i explain that i can ONLY have saturday appt - her response "I will send someone on Tuesday"  - asked for her supervisor and they give me to someone who speaks even less English - who tells me "I will send someone on Thursday"!  I finally gave up entirely, called the local store and told them I wanted the service contract monies returned. Lo and behold, I FINALLY got my Saturday appt.  When the technician arrived, he told me he could only service my washer, not the dryer because it wasn't listed on his ticket.  When I told him I had set up for both, he made ME call the service center to get the order fixed.  then this moron replaced my dryer hose (which was roughly 2 ft) with a 12 FT DRYER HOSE!  I swear it was so long it traveled from the dryer, over behind the washer and back again before going to the wall vent! He wasn't there to do anything with the dryer hose, so i didn't see this before he left, since both appliances are in a wall "pocket".  when we turned the dryer on, the hose blew off of the wall and shot lint everywhere - that's when we found what he'd done.  I called service center again and they told me I had to wait TWO WEEKS for someone to come back out and fix this properly.  As far as I'm concerned if they close we're not really losing much - will hurt the people overseas more than USA - these people have ruined this company, and the JC Penneys too.  Who had the bright idea that if we have people who speak no english answer the phones it will make the store better?  THIS is the moron we'd all like to find!!!
Oct 9, 2013 3:04PM
avatar
This is not something only Sears has done.  Too many businesses, retail, wholesale and industrial, only have a business plan that extends out as far as the new guru thinks they'll be employed.  Egos are too powerful and everybody wants to make their mark.  Acquisitions take place and the acquiring company tends to overlook the fact that the acquiree may not fit well with their model.  CEO's build in a parachute with other ceo's on the board so that when the excrement hits the air movement equipment they find a home with a board members firm.  How many companies will Nardelli trash before his contacts run out?  The old work ethic seems to have faded into oblivion and even a lot of the tech start-ups can be take-the-money-and-run.  Failure, thy name is greed.
Report
Please help us to maintain a healthy and vibrant community by reporting any illegal or inappropriate behavior. If you believe a message violates theCode of Conductplease use this form to notify the moderators. They will investigate your report and take appropriate action. If necessary, they report all illegal activity to the proper authorities.
Categories
100 character limit
Are you sure you want to delete this comment?

DATA PROVIDERS

Copyright © 2014 Microsoft. All rights reserved.

Fundamental company data and historical chart data provided by Morningstar Inc. Real-time index quotes and delayed quotes supplied by Morningstar Inc. Quotes delayed by up to 15 minutes, except where indicated otherwise. Fund summary, fund performance and dividend data provided by Morningstar Inc. Analyst recommendations provided by Zacks Investment Research. StockScouter data provided by Verus Analytics. IPO data provided by Hoover's Inc. Index membership data provided by Morningstar Inc.

STOCK SCOUTER

StockScouter rates stocks from 1 to 10, with 10 being the best, using a system of advanced mathematics to determine a stock's expected risk and return. Ratings are displayed on a bell curve, meaning there will be fewer ratings of 1 and 10 and far more of 4 through 7.

123
123 rated 1
266
266 rated 2
485
485 rated 3
660
660 rated 4
586
586 rated 5
652
652 rated 6
640
640 rated 7
504
504 rated 8
289
289 rated 9
159
159 rated 10
12345678910

Top Picks

SYMBOLNAMERATING
TAT&T Inc9
VZVERIZON COMMUNICATIONS8
CTLCENTURYLINK Inc8
EXCEXELON CORPORATION8
AAPLAPPLE Inc10
More

VIDEO ON MSN MONEY

ABOUT

Top Stocks provides analysis about the most noteworthy stocks in the market each day, combining some of the best content from around the MSN Money site and the rest of the Web.

Contributors include professional investors and journalists affiliated with MSN Money.

Follow us on Twitter @topstocksmsn.