3 iconic American brands destined for the trash heap

The economic downturn is taking a toll on these mainstays.

By InvestorPlace Oct 4, 2011 9:20AM
By Jeff Reeves, InvestorPlace.com

It has been ugly on Wall Street lately. Investors are spooked, consumers have prepared for the worst and businesses remain defensive. The Greek debt debacle is stealing recent headlines, but don’t fool yourself — persistent problems of high joblessness, a battered housing market and huge losses at financial firms continue to take a toll on the entire global economy.


While the big picture still is unfolding, there are a few stories for particular players that are rapidly approaching an unfortunate end. Victims of both the general downturn and of specific troubles related to their businesses, these iconic American brands are about to disappear.


We’ve already seen some retail big names go under in the past few years — Linens ‘n Things, Circuit City, Borders — but these aren’t exactly huge brand names. They are, after all, simply merchants who sell products from third parties.


But this latest wave of looming failures could be different because it will mean the end of some of the biggest American brands in history.


Here are those three iconic companies on the brink:


Eastman Kodak.
Eastman Kodak (EK) saw its stock step off a cliff recently thanks to news that it was scrambling for cash just for “general business purposes.” Not a good sign when you need to ask for a loan just to keep the lights on.


It should come as no surprise to anyone that Kodak has failed to transition into the digital photography age. A decade ago, Interbrand ranked Kodak as the 16th most valuable brand in the world,worth $14.8 billion — but every year since, the Kodak brand has fallen in both rank and value as consumers continue to identify it as an anachronism akin to rotary dial telephones and VHS tapes. The numbers at Kodak have been brutal as legacy film sales evaporate and its branded digital cameras and printers can’t fill the gap fast enough.

Its best year in recent memory was 2008, where it managed to post one good quarter and squeak out a full-year profit. Throw in a tough consumer spending environment, and Kodak seems destined to go to zero soon. That’s a sad fate for a company that once was synonymous with shutterbugs nationwide, but let’s be realistic. America’s “Kodak moment” seems to have come and gone — forever.


American Airlines. American Airlines parent AMR Corp. (AMR) already was having a bad year before losing 33% on Monday thanks to bankruptcy fears. And while many airlines have struggled in the past and a handful have successfully emerged stronger from bankruptcy, it’s difficult to imagine American Airlines will survive. The fundamental reduction in demand for seats is the biggest weight on AMR’s bottom line, and a bankruptcy work-out of high debt levels and high labor costs doesn’t change a thing.

Competing airlines have been having a rough go of it, too, but at least have consolidated and strengthened their share of the airline market to minimize damage. Take newly merged United Continental (UAL), which was meant to marry two companies that eventually would have disappeared independently. No, it’s difficult to believe there is life after bankruptcy for AMR in this market — unless you count a sale to a rival as other major carriers struggle to be the last fish in the pond that gets eaten. It all means that 80-year-old carrier American could be grounded permanently.


Sears. OK, Sears Holdings (SHLD) is a retailer like those I mentioned earlier. But it’s not the same at all. It has flagship brands of its own — including Craftsman tools and Kenmore appliances and Land’s End clothing — that have big weight with consumers. And heck, Sears was the low-tech role model of Amazon (AMZN) with its robust shopping catalog that dates back to 1888.


But despite its iconic status and rich history, Sears is in it deep right now. Revenue has slid every year since 2008. To make matters worse, Sears Holdings was created by a merger of Sears and Kmart, and the operation has been a disaster as management tries to get a handle on the 4,000 total stores. (Read a full and painful list here of the ways Sears has failed to reinvent itself recently.) The company has had only three profitable quarters in the past two fiscal years, and it is slated to be in the black just once in fiscal 2012 for an ugly $1.50-per-share loss. And that’s if all goes according to plan. Same-store sales in the first quarter were off more than 5% for Sears, so it could be time for this iconic American catalog company to consider mailing it in.



Jeff Reeves is editor of InvestorPlace.com. Follow him on Twitter via @JeffReevesIP and become a fan of InvestorPlace on Facebook.






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45Comments
Oct 4, 2011 7:12PM
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I find it incredibly sad that everyone wants to bad mouth Wal-Mart.  "Wal-Mart buys foreign goods."  "Wal-Mart has dirty stores."  "Wal-Mart has horrible customer service."    If WE THE PEOPLE keep shopping there, nothing will change... EVER.  Don't like foreign goods?  Don't buy at Wal-Mart.  Don't like dingy, dirty stores?  Don't shop at Wal-Mart.  Don't like bad customer service (you might want to try being a good customer before you complain about "customer service")?  Don't shop at Wal-Mart.  Sounds pretty simple, doesn't it?

It's called common sense.  If you don't like something, don't go there.  Wow!  How hard was that?  The problem is, we complain about Wal-Marts Quaility, Cleanliness and Service, yet, people keep shopping there.  How is the company going to change if people keep on keeping on?  I targeted Wal-Mart here because it is what most people cry about.  But many other retailers are the same way.  

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sad situation and a testament to the fall of America. America and it's companies once ruled the world. almost everything made from tvs, radios and autos were made in USA back in the 50's-60's. As we continue to lose American icons known worldwide we know that the US is falling away from superpower status.
Oct 4, 2011 10:38PM
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I have worked as a manager in corporate retailing for 45 years. What determines how good a store’s customer service is going to be is directly related to how well the employee is treated by the corporation. If you treat your employees with disrespect they in turn will convey that same attitude to the customer.

 

You can’t browbeat, humiliate, and insult your employees and create an atmosphere filled with negativity and then expect the sales associates to treat their customer in an opposite manner.

 

A customer has the option to shop elsewhere. But, the employee does not have the same wherewithal to leave their employment.

Oct 4, 2011 7:18PM
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I'm 69 and went to wal-mart for the first time the other day I needed one item I could not find at other stores. Is this where all the obese people shop I seen a lot of people in those mechanical shopping carts funny I watched this rather large woman try to reach into a fridge case and I swear she had to be a plumber, she showed about eight inches of butt crack. what the attraction is at wal-mart is beyond me. costco is bigger and cleaner and cheaper from what I seen. and at costco you don't have to be 400 pounds to get the automatic door to work. If you are so fat you can't walk you don't belong in a place that sells food. pretty soon they will have attendants at mc. donald to put their fat butts in wheelchairs and take them to the feed trough.
Oct 4, 2011 11:24PM
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I keep saying that the customer is more important then the share holder.
Oct 4, 2011 7:09PM
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I have been a Sears customer for many years. But, I have to recognize that the service quality has decreased a lot. Most definitely, I don't go to Wall mart, at all! But Sears has to change in areas such as employees treatment to customers, more people working at stores and, sometimes, the way the stores are organized.

And please, make sure all the merchandise has a price tag. It's quite annoying to have to look for someone to check the price for you and you can't find one to help.

Good luck Sears!

Oct 4, 2011 6:47PM
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Corporate greed by companies like Wal-Mart is one  of the reasons for this....How many billions do the Waltons need before they're satisfied ? Buying everything from foreign countries is another major issue.

Oct 4, 2011 9:11PM
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We lost our savings, our jobs and equity homes because the LACK OF regulation in LONG-TERM CAPITAL MANAGEMENT ( LTCM derivatives). Thank you Wall Street !  ____________________________________________________________________ Time to take all our money from the corporate greed.

Oct 4, 2011 7:30PM
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"Iconic Brands Headed for the Trash Heap".  I find that title very offensive.  Just report the facts from here on without adding your personal jab. 

Oct 4, 2011 10:53PM
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The future: Corporations rule America. CEOs vote among themselves who will be "president" for one year. All jobs will be outsourced that can be outsourced. The middle class (the folks with jobs) will be living on corporate credits which can only be spent at predetermined locations. The poor will live on food bricks, made of God knows what, in fenced off areas even the police and firefighters won't enter.

The rich will live in ivory towers, waited on by those middle class folks already mentioned. In a few more years, the corporations of Europe and Asia will take over their parts of the world.  Corporate competition will lead to war. The poor, hoping to improve their lot, will be happy to fight for a chance at upward mobility.

You are no more than a number and an expendable one at that....Good luck.....Open-mouthed

Oct 4, 2011 7:29PM
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Mr. Reeves is just another example of the typical "journalists" (and I use that term loosely) that writes articles while seemingly grinning that an American company is doing badly.  I'm surprised he doesn't write for MSN.  I doubt his company is doing any better than Sears, who by the way, is much better than Walmart these days at customer service. 
Oct 4, 2011 10:50PM
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I think that it is very, very important for the corporate structure, whatever and wherever it may be to treat their employees with some form of dignity and or respect. I went to a Jesuit University in the midwest with a very strong business accent and learned that it is the employee who is the point of contact with the consumer.  Not that you have to concede every want and desire of the employee but you must make them an important asset.  Rely on their input and contacts with the consumer.  Any corporation that doesnt learn this is doomed to failure.
Oct 5, 2011 12:24AM
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sears lost my business when they  without notice cancelled my sears card 2 years ago- I had been a card holder since 1988 and had purchased many appliances over the years from them and had never been late on payment when I did carry a balance-  I guess they are looking for a poorer customer- Good luck  Sears  with your Chinese credit card holders.
Oct 4, 2011 10:33PM
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It will be a great day when Wal Mart hits this list of dying iconic brands.
Oct 4, 2011 9:39PM
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Campforlife, you can hardly blame the CEOs of an institution like Levi Jean Company when they have made a great product for over a century, and kept it relatvely affordable. Blame the idots who buy their kids $200 True Religion, Roberto Cavalli. APO. 7 For All Mankind jeans in order to be "cool". What was Levi's bpard supposed to do, market $300 jeans for the working man? Buyout a fly-by-night trendsetter? Truth is, this is a BAD economy and a lot of great American companies are hurting. What we need is to get Obama out of office and replace him with someone-- Democrat or Republican-- who understands basic macroeconomic theory; how NOT to waste money (remeber the Economic Stimulus Package?); and, most of all, how to put Americans back to work!

Oct 4, 2011 8:54PM
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Kodak came out with one of the first digital cameras. It's not like they were asleep at the wheel. American Airlines suffered under corporate greenmailer Carl Icahn (who believe me, is no icon). And Sears made a huge mistake merging with K-Mart (gotta know you;'re in trouble when you take on a Poor Man's Target). Truth is, we should be PULLING for these-- and ALL American corporate white knights to survive... NOT ridiculing them with a grin like this so-called journalist. Since when did Chicken Littleism become corporate journalism? And another truth: WE NEVER SHOULD HAVE ELECTED A TOTAL INCOMPETENT LIKE OBAMA INTO OFFICE. He had cool speeches, but no substance or backbone. Zero leadership. He's done NOTHING! So much for having a couple years of experience in the US Senate. Give us a candidate with VISION, DETERMINATION, AND PROVEN EXPERIENCE in the private sector!
Oct 4, 2011 11:35PM
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Oh Billcccc, you and your ilk who like to knock unions and think we are overpaid have no idea how hard some of us work for our wages and benefits. I do make a great salary and have good benefits; in turn my company expects me to be available 24-7 365 days a year.  In the past, I've worked up to ninety straight days and sometimes over 16 hours in a day hauling freight around for the UP railroad.  We are not all lazy, what is lazy is your thought process and how you generalize all union people. This article was about the failure of three businesses who have not adjusted well to market conditions. As you can see from how many who dislike your comments, you have touched a nerve with your conservative comments.  
Oct 4, 2011 11:30PM
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In a free market system, companies go away and new ones tke their place.   Companies that survive the test of time tend to be chameleons, every changing to meet what the consumer wants.  Despite all the advertising, Sears is not the place where working American gets the best deal.  I have tried shopping Sears over the past several years for appliances, household items, etc and have always found what I was looking for, at a better price elsewhere-that is the bottom line for most consumers.  And my last several visits to K-Mart have me wondering about what their identity is.  Used to be the place to go for your household cleaning supplies, staple items like toilet paper and paper towels, personal care products like shampoo, toothpaste, but once again, I can find most things cheaper elsewhere.  K-Mart tried to get in on the rewards program, but the points expire before you have enough for a reward, so where is the reward for shopping there.   And I fail to see why patio furniture is worth 30% more just because it has Jacqueline Smith's name on it or Martha Stewart-the quality isn't really any  higher for having a celebrity endorsement.    And Lands End has just become way too pricey for most peoplle to consider.  The sales are going to fall off as long as people can find similar quality for a lesser price.

Oct 4, 2011 9:39PM
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My Sears has the best auto maintenance shop I have ever taken my cars to. Ive been there 4 times so far (early in the morning) and they always have diagnosed severe problems, got the unique parts in, and fixed it the same day except for one time. That time the parts store they source from brought the wrong parts twice so the manager himself drove me home (nearby) and picked me up at lunch when it was ready the next day. I will be very disappointed if sears auto goes under. Its good trusty service not at dealership prices and I can go to the mall/food court/movies while waiting. I have no relation or stake in the company. I don't use sears for anything else. But if you go down, Lewisville TX sears auto, I will be saddened.
Oct 5, 2011 12:10AM
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I very much dislike having to order parts for my lawn mower on line. Then I have to use A CREDIT CARD or they  will not process my order. As the sears stuff wears out it's being replaced with things I can get parts for locally. i just lost all respect for sears. ED.
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