The number to pay attention to at Sears
This is one retailer that doesn't like to spend much money making its stores appealing to customers.
That number is the amount Sears spends each year updating its stores.
Retailers like to take good care of their stores. They'll refresh the color themes, upgrade the cash registers, replace carpets and redo the signage -- anything to make the overall shopping experience better. Target (TGT), for example, announced a $1 billion renovation program last year.
In general, retailers spend $6 to $8 per square foot a year on these updates, ISI analyst Greg Melich told The Wall Street Journal.
But Sears spends far less -- about $1.50 to $2 per square foot. "That is not even enough to keep up with depreciation and amortization," writes the Journal's Justin Lahart.
So Sears management is literally watching the stores fall apart -- and doing nothing about it. Is it any wonder, then, that sales have dropped to an estimated $42 billion this year from $53 billion five years earlier? Or that the company is closing more than 100 stores next year?
If management doesn't care much about stores, don't expect shoppers to either. We've heard from plenty of commenters on this site about the deplorable customer service and shopping conditions at Sears and Kmart stores. People don't want to visit crumbling stores that haven't changed in 10 years.
There's one more number that plays into this as well, and it shows where Sears has chosen to put its money instead. The company has poured $5.2 billion in the last five years into share buybacks, which keeps the share price up and consolidates control over the company into the hands of just a few.
Looking at these numbers, it seems pretty clear that management doesn't mind running the company into the ground -- as long as it can profit along the way.
Sears needs to sell only its best products - tools and appliances. Forget the clothes which takes up 90% or more of a store's square footage and does not return sufficient revenue for that amount of devoted space.
I agree. Sears didn't get great in the first place by simply selling shares. Short term gimmicks like buybacks and reverse splits don't create real value.
They have some good tool and appliance brands. Focus on what you are good at, the rest will follow.
Get rid of " Kardasian " (sp) clothes and I might shop there again.
Plus , put in some shirts etc. that don't fade after being washed a couple times. ;(
I have dealt with Sears for many years and this past year was the final for me. Their customer service is the worst I have ever dealt with and they don't care about resolving any issues you might have. Spent tens of thousands of dollars over the years but they don't follow thru on their warranties and they make false promises that they never keep. I for one am glad that they are going under. There are too many other companies ready to work for our business.
It's amazing to me that sears has lasted as long as they have.
The people in high places gain the wealth and the ones doing
the work die in poverty. There are workers who have great ideas
as to ways for making the company better. No one listens as you
can see. I say good riddance. Sears has the ugliest clothes in
retail history and Kmart is a high class second hand thrift store.
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