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RightNation.US: Is Sears circling the drain? Not yet, Wall Street says - RightNation.US

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I previously wrote about Sears back in April, around the time of the "may not survive the coming year" filing with the SEC.

Is Sears circling the drain? Not yet, Wall Street says

Charisse Jones and Nathan Bomey, USA TODAY Published 6:29 a.m. ET Aug. 24, 2017 | Updated 11:12 a.m. ET Aug. 25, 2017
© 2017 USA TODAY, a division of Gannett Satellite Information Network, LLC.
Source; excerpts follow:


Sears Holdings said Thursday it would close another 28 Kmart locations as it continues its cost-cutting campaign, again making it the poster child for the precipitous decline of the American department store.

The company also posted declining sales and profits, but the results were better than analysts expected and led to a brief surge in its stock price before closing at $8.55, down 2 cents.

The Kmart closures add to a list of 330 Sears or Kmart locations shuttered or set to be closed later this year as the retailer seeks stability…

"We will continue to right-size our store footprint to ensure we are positioned to meet the realities of the changing retail environment,'' Rob Riecker, Sears Holdings' chief financial officer, said in a call with investors…

"Right-size" is corporate jargon that almost always means "downsize". If they manage to stem the losses, then they'll be able to use the "poised for growth" euphemism (I.E.: "We've hit bottom").

There are competing opinions regarding what this latest closure announcement indicates about the health of the company:


… It "strikes me more as good store hygiene rather than a foreshadowing of another round of mass closures," said Greg Portell, lead partner in the retail practice of A.T. Kearney, a global strategy and management consulting firm. "It is good for a retailer to always be challenging their footprint.''

But Neil Saunders, managing director of GlobalData Retail, sees the continuing store closures as more ominous.

They "signal that Sears is broken and that increasing numbers of people do not want to shop there,'' Saunders says, adding the company needs the money generated by sales of its real estate to stay afloat. "This is much deeper than getting the footprint right or adapting to the modern era of retail. It's surgery to remove dead or dying parts of the organization.''…

In a series of financial maneuvers, Sears said it had gained access to additional borrowing capacity and extended the maturity on certain loans to allow it to stay afloat longer as it continues its restructuring plan…

Sears CEO Eddie Lampert, who has criticized talk of the company's demise as "harmful'' and premature, said the company is moving toward its goals to restore the strength of its bottom line.

"We are making progress on the strategic priorities we outlined earlier this year and remain focused on returning our company to profitability," Lampert said in a statement. "The comprehensive restructuring of our operations is delivering cost efficiencies helping drive improvements to our operating performance."

Earlier this year, the company sold its signature Craftsman brand for more than $900 million. It says it is on track to meet its goal of cutting $1.25 billion in costs by the end of the year, having already achieved more than $1 billion in savings. And the deal to start selling Kenmore appliances on Amazon could provide additional income as Sears also takes on the tasks of delivering and installing the Kenmore products…

The full article goes into more detail (numbers), including a mention of several other brick-and-mortar retailers. Amazon is mentioned only in reference to the arrangement to sell Kenmore appliances thereupon.

The article closes with a backhanded compliment from the guy with the "ominous" opinion above:


"As much as the company is very poor at retailing, it is very good at financial management to ensure it stays afloat,'' Saunders says. "This holiday season will not likely be the tipping point for the company. That said, the holidays will reveal how much further Sears can fall, especially on the sales front.''

Although I've been shopping online (notably for gifts) for years, I still go to my local Sears store for many clothing, tools, and appliance purchases. (My washer, dryer, microwave, and trash compactor are all store-bought Kenmore.) It's not as well-staffed as it used to be, but of course, there are fewer shoppers.

I still have vague memories, from when I was a youngster, of visiting some classic department stores. They were orderly, the staffs were neat and friendly, the stores had pleasant aromas, and there was sometimes music drifting down from overhead (occasionally interrupted by soft chimes) as background to the gentle din of business being conducted. I even remember an old-fashioned elevator with a uniformed operator.

The notoriety I earned back then for getting "lost" in department stores is undeserved. I knew exactly what I was doing (Exploring!), and just because my parents couldn't find me didn't mean that I was "lost"! Try to keep up, Mom!

Time grinds on and technology marches forward; change is neither necessarily good nor necessarily bad. Nostalgia can feel good although it's important to remain functional in one's current environment. Even so, I don't feel quite ready for giant warehouse airships and front-door drone deliveries.

Not yet.


3 Comments On This Entry

In some respects, Sears might be a company worth taking a gamble on. As far as trying to save the company, as bad a shape as they are in almost gives the powers that be the freedom to really swing for the fences and take a chance on some crazy idea that might work.

Badger Fan, on 01 September 2017 - 05:35 PM, said:

In some respects, Sears might be a company worth taking a gamble on. As far as trying to save the company, as bad a shape as they are in almost gives the powers that be the freedom to really swing for the fences and take a chance on some crazy idea that might work.

I agree but there’s a wrinkle: publicly traded companies are beholden first to their shareholders. If they try something wacky and it doesn’t work then they’ll be sued out of existence.

I have to believe anyone currently long on Sears stock is doing so with the expectation that they are going to lose, but taking a cheap gamble that some way, some how, they turn it around.
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