Originally published February 23, 2012 at 9:59 PM | Page modified February 23, 2012 at 10:13 PM
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Comments (2) .E-mail article .Print Sears shedding some stores, reports 4Q loss Sears said it's unloading some of its profit-busting stores, including one in Bellingham, but the retailer fell short of revealing how it plans to woo shoppers back into its remaining ones.
By ANNE D'INNOCENZIO AND MAE ANDERSON
The Associated Press
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AMY SANCETTA / AP
A worker repairs the Sears sign outside a store in Solon, Ohio. Sears said Thursday that it will spin off its smaller Hometown and Outlet stores as well as some hardware stores in a deal expected to raise $400 million to $500 million. The company also said it will sell 11 stores to the real-estate company General Growth Properties. Related Most Popular CommentsHide / Show comments For me, what has led to the downfall of sears is the increasingly poor quality of its... (February 23, 2012, by -ftg-) MORE Years ago, I happened to visit the Sears in Vancouver, B.C. It was actually a very goo... (February 24, 2012, by Sophie-ophie) MORE Read all 2 comments Post a comment .
NEW YORK — Sears said Thursday that it's unloading some of its profit-busting stores, including one in Bellingham, but the retailer fell short of revealing how it plans to woo shoppers back into its remaining ones.
Investors have long speculated that the troubled retailer could sell off its massive real-estate holdings to generate extra cash. But industry watchers say that will do little to solve Sears' main problem: Rivals have been able to lure customers away from the chain because of its drab stores and unexciting merchandise.
"The image is atrocious. The stores are old and they're rundown. They don't look like a nice place to visit," said Ron Friedman, a partner in the retail- and consumer-products industry group of accounting firm Marcum in New York. "I don't think that the Sears we see today can be around from a year today. It has to change."
As part of a plan to turn around the company, Sears, based in Hoffman Estates, Ill., said Thursday that it will spin off its smaller Hometown and Outlet stores as well as some hardware stores in a deal expected to raise $400 million to $500 million.
In a separate deal, Sears will sell 11 stores to the real-estate company General Growth Properties for $270 million. The company also said it plans to cut inventory by $580 million.
One of those stores is the full-line Sears store at Bellis Fair in Bellingham. In a media release, Sears said the store will continue to operate into 2013 with final closing date to be announced later this year.
The plans follow news in December that the company would close at least 100 to 120 stores to raise cash after a disastrous holiday season in which revenue at stores open at least a year — an indicator of a retailer's health — fell 5.2 percent in the eight weeks ended Dec. 25.
"We're executing actions to unlock the value of our portfolio and assets," said CEO Lou D'Ambrosio in a call with analysts.
Shares soared as much as 20 percent Thursday on the news, despite the fact the company also reported a $2.4 billion loss for the fourth quarter, much worse than what Wall Street analysts had expected.
The climb extended a rally the retailer has enjoyed since January as its assured suppliers and investors that it can honor its financial agreements. Shares have been up more than 60 percent since the beginning of the year. Sears Holding stock was up 18.7 percent to close at $61.80 on Thursday.
Industry watchers weren't as impressed as Wall Street. They said that Sears' biggest problem is that the company hasn't invested in its stores.
Indeed, rivals like Wal-Mart typically spend between $6 and $8 per square foot on things such as updating cash registers, replacing floor tiles and repainting stores, according to research firm International Strategy & Investment Group. But over the past few years, Sears spent on average between $1.50 and $2.00 per square foot.
"We feel they're not doing enough to solve the problems for the future," said Michael Cipriani, senior vice president of Rosenthal & Rosenthal, which buys merchandise from suppliers and then collects the money from the retailer once the goods are sold. "We think they're going to continue to lose money."
In Thursday's announcement, Sears said it swung to a loss in the fourth quarter, with adjusted earnings totaling 54 cents per share, well below analyst expectations of 76 cents per share. Revenue fell 4 percent to $12.48 billion from $13 billion last year. Analysts expected $12.44 billion.
D'Ambrosio emphasized that it's important to distinguish between the retailer's short-term operating performance and its balance sheet or liquidity. The company does have cash.
He also said that he and the board are "wide open for good ideas" for investing in the stores. But D'Ambrosio said that how much Sears invests in capital expenditures doesn't tell the whole story.
One should look at what Sears is doing to make the overall shopping experience better, he said. In fact, D'Ambrosio said the last year, Sears invested several hundred million in making the customer experience better.
Among the things the company has done: roll out close to 15,000 iPad and iTouch devices to stores so that sales staff can research products and can help customers check out.
The company also is working on better displaying merchandise, including pairing up headphones with teen clothes. Consumers will also see a new lineup of more high-tech washing machines and other appliances, he said.
"Looking at just (capital expenditures) belies our investment in the customer experience," he said. "We are going to win our game."
JUST BECAUSE SISSY SAYS SO DOESN'T MAKE IT SO...BUT HE THINKS IT DOES!!!!! JUST BECAUSE MC1 SAYS SO DOESN'T MAKE IT SO!!!!!
This was expected -- K-Mart announced a bunch of closings several weeks ago .. Sears said at that time that it would be closing some of its stores. Sadly --- many business analysts don't believe that Sears-KMart will survive even with the closing of some stores. It is caught in the same "death spiral" that Friendly's is in ... close low performing stores to cut expenses .. but the company still loses money .. and the company can't afford to make the upgrades needed to make it competitive and profitable again.
The best case scenario is for some other company to buy out Sears-KMart and be willing to invest a lot of money into upgrading the company. My guess is that the Kmart side will eventually be gone .. completely. The Sears side could survive -- if someone is willing to invest the money and do it soon.
George Amedore & Christian Klueg for NYS Senate 2016 Pete Vroman for State Assembly 2016[/size][/color]
"For this is what America is all about. It is the uncrossed desert and the unclimbed ridge. It is the star that is not reached and the harvest that is sleeping in the unplowed ground." Lyndon Baines Johnson
You know, in another post, I just put that I was looking for Ron to come up with some actual points, and to be honest, to some extent, I think he just hit on it. Might be a little off, but either selling off some stores and getting the money that way, or finding other ways to cut expenses and reorganizing to some extent might be the right way to go. Death spiral? I don't know, but they are definitely not succeeding now like they used to.
You know, in another post, I just put that I was looking for Ron to come up with some actual points, and to be honest, to some extent, I think he just hit on it. Might be a little off, but either selling off some stores and getting the money that way, or finding other ways to cut expenses and reorganizing to some extent might be the right way to go. Death spiral? I don't know, but they are definitely not succeeding now like they used to.
He's paraphrasing what can be readily found on the web...
JUST BECAUSE SISSY SAYS SO DOESN'T MAKE IT SO...BUT HE THINKS IT DOES!!!!! JUST BECAUSE MC1 SAYS SO DOESN'T MAKE IT SO!!!!!
There is a lot of competition out there for starts. Add outsourcing. Then add a major recession and high unemployment and someone is bound to fold.
When the INSANE are running the ASYLUM In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. -- Friedrich Nietzsche
“How fortunate for those in power that people never think.” Adolph Hitler
K-mart already was under Chap 11 I believe some time ago and it wasn't until shortly therafter they emerged from bankruptcy that they bought Sears, I think. I believe Sears made some mistakes in the past that hurt them, like branching out with the smaller stores, etc. The attraction to their soft goods was from foot traffic for the hardware and appliances and electronics. When people could go to a Sears Hardware for those items, the soft goods suffered. Sears also made some bad moves.....relocating stores that were already productive and moving them to new locations where they were attractged by incentives and thought they would see more foot traffic. They are all business decisions, and sometimes they are wrong and there are consequences as a result. Worst part is the people that wil lose their jobs....they are the forgotten ones in the decision processes.....guess it's called collateral damage.
JUST BECAUSE SISSY SAYS SO DOESN'T MAKE IT SO...BUT HE THINKS IT DOES!!!!! JUST BECAUSE MC1 SAYS SO DOESN'T MAKE IT SO!!!!!
The points that are made can be easily found on the web and in print publications and heard on radio and television -- because as I said it is what a number of business analysts are saying/writing.
The reference to a "death spiral" is directly from a business analysts that I heard on one of the business channels on cable. Basically, Sears-KMart is losing money .. so they are going to close low performing stores to save money but closing stores is not enough. It will just create a vicious cycle .. losing money -- > close stores ---> continue to lose money -----> close some more stores ---> continue to lose money and on and on.
Ultimately, Sears-KMart has two huge problems .. KMart is an obsolete business model -- it can't compete with Wal-Mart and Target -- and I agree with many of the analysts who believe that ultimately the K-Mart side of the business will cease to exist. The Sears side of the business could survive -- but it needs to re-position itself -- but that will require a huge infusion of cash -- and that is something it doesn't have. So, I agree with those analysts who suggest that the best case scenario for Sears would be to find someone willing to buy it out and invest a huge amount of money in it.
George Amedore & Christian Klueg for NYS Senate 2016 Pete Vroman for State Assembly 2016[/size][/color]
"For this is what America is all about. It is the uncrossed desert and the unclimbed ridge. It is the star that is not reached and the harvest that is sleeping in the unplowed ground." Lyndon Baines Johnson
K-mart already was under Chap 11 I believe some time ago and it wasn't until shortly therafter they emerged from bankruptcy that they bought Sears, I think. I believe Sears made some mistakes in the past that hurt them, like branching out with the smaller stores, etc. The attraction to their soft goods was from foot traffic for the hardware and appliances and electronics. When people could go to a Sears Hardware for those items, the soft goods suffered. Sears also made some bad moves.....relocating stores that were already productive and moving them to new locations where they were attractged by incentives and thought they would see more foot traffic. They are all business decisions, and sometimes they are wrong and there are consequences as a result. Worst part is the people that wil lose their jobs....they are the forgotten ones in the decision processes.....guess it's called collateral damage.
Kmart and sears were losing ground when they merged. That was the pivotal point in their success or failure. They are NEVER going to compete with walmart. In order to do so........Kmart/sears will have to reinvent themselves.....if they can.
It will be interesting to see how well Target does in Glenville with a Walmart supercenter right down the road! Gotta give Target credit for taking this 'leap of faith'!
When the INSANE are running the ASYLUM In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. -- Friedrich Nietzsche
“How fortunate for those in power that people never think.” Adolph Hitler
I dont like shopping with pajama wearing idiots......dollar stores are a thorn in my side......
again it comes down to patina.....if you seek cheap, cheap is what we get.....finding a good deal is one thing....running around like a hampster buying sh!t on a shingle is another......it leave a stain on the community...why bother working upward in life when there is soooooo much comfortable crappy shopping with a great experience around you......
the internet and home delivery is where it's at now......stay away from the pajama wearing hampsters......
...you are a product of your environment, your environment is a product of your priorities, your priorities are a product of you......
The replacement of morality and conscience with law produces a deadly paradox.
STOP BEING GOOD DEMOCRATS---STOP BEING GOOD REPUBLICANS--START BEING GOOD AMERICANS
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