Sears Continues to Slide
This week Sears Holdings released quarterly results. The latest numbers suggest that the company hasn’t managed to slow the declines at Sears.
Overall results for Sears Holdings were poor, with revenue for the quarter ending October 30 down 5% from $10.2 billion in 2009 to $9.7 billion this year. The company lost -$215 million this year, substantially worse than the -$112 loss last year.
Perhaps most disturbing, same store sales for Sears were down by -8.2%. That is a remarkable number.
There isn’t any reason to think things will turn-around soon. The Sears brand continues to be caught in the middle, trapped between low-price retails and differentiated retailers. Sears has a fundamental positioning problem and no easy way to fix it.
K-Mart, at least, has a clear place to play: a low-price retailer battling Wal-Mart and Target. This is a tough fight, but at least there is a big chunk of business to fight over.
Without some huge investments in the brand, Sears will continue to decline. The only real question is this: when does it end? Retailer brands come and go. How much longer will Sears be around?
As a leader at an apparel brand that sells into Sears, I’m witnessing first hand- on a weekly basis- their steady slide against the Kohls and JCP’s who are effectively connecting w/ consumers thru powerful promotional messaging (Kohls) and strong private label & captive brands development (JCP). Sears has just relocated its Apparel Buying team from the Chicago ‘burbs to downtown SF in an effort to recruit young talent, and is trying to reinvent themselves through ‘transformation doors’ and new brand concepts. I’m dealing with an almost entirely new buying team composed of external hires. The results will need to come quickly- and beyond just product. I don’t see them going away, but I do see them changing the scope of their offering.
Tim,
I continue to believe that Sears is unfortunately on a slow slide into oblivion. When I left in 2003 it was clear we had taken a few steps to improve things, but none to profoundly change our competitive position.
The merger with Kmart has created a few cost efficiencies, but again, nothing to fundamentally create a set of value propositions that can fight and win in today’s increasingly competitive market.
Sad, but true.
Steve—Thanks for the comment. I agree the Kmart merger wasn’t a bad move; it certainly built scale and efficiency. But as you point out it didn’t change the basic dynamics of the situation.
Tim