But that may be changing: The retailer posted a stunning 99% nosedive in third-quarter profits. And comparable-store sales--the measure most closely watched by retailing insiders--continued their southbound slide, falling 4.6% for the quarter, including a 4.2% decline at Sears' domestic units, and a 5% fall-off at Kmart.
The problem "is creating a sustainable and profitable business," says Neil Stern, a senior partner at McMillan/Doolittle, a retailing consultancy in Chicago. "Lampert's approach has been different than conventional retail wisdom, focusing more on profitability and inventory management than chasing sales. But you can't keep cutting costs, losing customers, and losing sales."
"We are very disappointed in our performance for the third quarter," Sears executives said in releasing the news. "We cannot blame our results entirely on the retail and macro-economic environments. We have much to improve and are working hard to do so."
The company says declines were worst in apparel and lawn and garden at both chains, partially offset by stronger sales in Sears' home electronics.
One could hardly argue that Sears is not still an important player in the retail world: The combined companies comprise the nation's fourth-largest broadline retailer, with over $50 billion in annual revenues, 3,800 stores, and a portfolio of powerful brand names, including Kenmore, Craftsmen tools, and Diehard.
And it certainly continues to be controversial from Wall Street's perspective, especially with last week's news that it has bought up a 13.7% chunk of Restoration Hardware, a niche retailer in one of the most struggling market segments. (Separately, Lampert's hedge fund recently acquired 16.7 million share of Home Depot stock, valued at about $541 million.)
Certainly, "many regard the holding company as kind of publicly traded hedge fund," Stern says. "But as a retailer, the numbers speak for themselves. Sears is a company with a tremendous reputation, a lot of goodwill, and strong product line. But over time, interest has dissipated. They do have great assets to work with, but you've got to work them. Sears is doing 10 mph, and its competitors are going by at 60."