Sears is in huge trouble.
The department store has been bleeding cash, posting its ninth straight quarterly loss this morning.
Sears CEO Eddie Lampert said that the company will close even more stores and cut costs in the coming months to combat the “unacceptable” losses.
Earlier this year, former Sears executive Steven Dennis wrote that he believes a turnaround is impossible.
“The uncomfortable and sad reality is this: Sears has zero chance of transforming itself into a viable retail entity,” Dennis said.
Here are four reasons Sears is tanking, and has little hope of recovery.
1. No one wants to shop at Sears. The department store “just doesn’t have the same resonance, it doesn’t have the same level of importance to people as it had 30 years ago,” Matt McGinley, managing director at International Strategy & Investment Group, told Bloomberg News. An investigation by Wall Street analyst Brian Sozzi found that many Sears stores are in disarray, making them unattractive to shoppers. Here’s a photo Sozzi snapped of abandoned portrait studio.
2. Sears has an identity crisis. In today’s competitive retail landscape, it’s essential to give customers a reason to shop your brand. People go to Macy’s for the great selection, and Wal-Mart because it’s cheap. Sears has failed to cultivate a brand image. “The world does not need a place to buy a wrench and a blouse and a toaster oven,” Dennis writes. Attempts at luring customers through fashion lines with the Kardashians and a loyalty program have failed.
3. The brand isn’t investing in the future. Sears is closing stores and cutting costs, while failing to invest in strategies that could improve business. Brian Sozzi, chief equities strategist at Belus Capital Advisors, points out that Sears’ capital expenditures, or investments in the future, are a fraction of what competitors are spending.
4. Unsustainable strategy. Sears has been funding its business by spinning off valuable properties like Land’s End and Sears Auto. Eventually, “Sears will run out of assets to sell to raise cash to fund operation,” Sozzi says.
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