“Sears and Kmart -- can you imagine America without them?” reads the lede in the Los Angeles Times this morning. Sears Holding Co.’s announcement yesterday that as many as 120 of its nearly 2,200 full-line U.S. stores would shut following a disappointing holiday sales season puts us a little bit closer to that reality.
"I hate to say it, but it might be like someone going into Alzheimer's -- it's that long goodbye," Britt Beemer, founder of America's Research Group, tells the LA Times’ Shan Li and Ricardo Lopez. "I am fearful we are going to talk about Sears for the next 10 years until they're gone."
Miguel Bustillo and Ann Zimmerman waxed a little less nostalgic in the Wall Street Journal. Their lede: “Edward S. Lampert's plan to build a reinvigorated retail giant from the crumbling ruins of Sears and Kmart is turning into a mess.”
The New York Daily News’ report points out that sales “tumbled 6% in the eight weeks leading up to Christmas Day” despite the fact that Sears launched a Kardashian Kollection clothing line earlier this year.
Although the number of store closings represents just a slice of the total pie, “they underscore the retailer’s precarious financial position,” writes Azam Ahmed in the New York Times.
“They’re not going out of business tomorrow. But here is a company that is deteriorating in front of our eyes, and it could cost a lot of jobs,” Credit Suisse analyst Gary Balter tells Ahmed. “Somebody should be worried about that.”
Wall Street is, and it did its talking in the usual way yesterday, sending shares plummeting 27% after the company’s announcement. It also reported that it would record up to $2.4 billion in quarterly charges. Yes, billion. Shares are down 73% since Lampert merged the two retailers under one holding company in March 2005.
The Journal’s Bustillo and Zimmerman shine a light directly on Lampert, who is notoriously tight-lipped with the press and doesn’t have much to say around analysts either. The analytical 49-year-old hedge fund chairman (ESL Investments Inc.) “has been a hands-on manager at the retailer he built, often managing its day-to-day affairs,” they write. But he eschews “same-store sales and other traditional retail metrics as irrelevant, promising to run the company as an investor would, with a focus on measures such as earnings before interest, taxes and depreciation and spending on high-growth areas such as online retailing.”
And how’s that going for him?
Well, besides “confounding” retail experts, he seems to have alienated consumers, scared away seasoned executives and -– perhaps worse of all –- ticked off Martha Stewart.
“"Have you been in a Kmart lately? It is not the nicest place to shop," Stewart said in 2009 after her 22-year relationship with the retailer ended in a bitter breakup.
“Critical customers responded to the announcement by griping about messy stores and rude associates on online forums,” reportsUSA Today’s Laura Petrecca, who refers to a new report by Credit Suisse analyst Gary Balter that says the company "effectively ask(s) customers to pay for a poorer shopping environment than available at competitors and online."
Sears is still determining which stores will shutter; a list will be posted under the Media Tools section of www.searsmedia.com when it is available. All told, Sears Holdings operates in about 4,000 locations in the U.S. and Canada, employing 250,000 people or so.
Not everyone greeted yesterday’s news with resignation that the end is nigh for Sears after more than 125 years on the American scene.
"We were not pleased with the results we issued, but in no way does that have us question the clarity of where we are taking the company," CEO Lou D'Ambrosio told the Journal yesterday. The company will continue to focus on combining its bricks-and-mortar operations with online sales, according to D'Ambrosio who, the Journal points out, is “a former tech executive who had no retail experience prior to assuming the job in February.”
“What they are doing is what I call a cleansing. They are at a point where they are saying, ‘You know what? Underperforming stores -- we’re getting out from underneath them,’” NPD Group chief retail analyst Marshal Cohen tells the Boston Globe’s Erin Ailworth. “Sometimes smaller is stronger.’’
Cohen also ties Sears’ woes to the recession and pointed out that other retailers were going to face similar tough decisions over time. “What the recession basically taught us was that you really have to assess every individual store, every individual performance,’’ Cohen says. “This is a transition [period], not an indication of a disaster waiting to happen.’’
But there’s an increasingly strident chorus of consumers, workers, executives and pundits out there who are singing a different tune: “Enough already with the transitions.”