Sears has been bleeding cash and closing hundreds of stores.
In a blog post Monday, Sears CEO Eddie Lampert opened up about the company’s troubles and compared the changing retail landscape to the demise of landline telephones.
“In virtually every city across the country, real estate owners and communities are trying to figure out what to do with large, windowless buildings that once held essential — now useless — telephone equipment to make landlines work,” he writes. “Some developers are trying to convert them into offices or apartments. Other entrepreneurs think the solid construction and robust electric power could support data centres for new generations of businesses. None of these transformations are simple.
“Similarly, some of our stores are simply too large for our needs, given that populations shift, new roads are built and new retail areas open constantly. Restoring them to profitability has been a challenge.”
Sears has 1,700 Sears and Kmart stores representing about 200 million square feet of retail space, according to the post.
The company has primarily targeted underperforming stores for closure. But in some cases, Sears is closing even profitable stores because mall owners are buying them out.
“Many of our stores are in some of the most attractive mall locations in the country,” he writes. “Though we expect most of them to stay open for the foreseeable future, in some places mall owners and developers have approached us with the opportunity to reposition our stores for other uses and are willing to compensate us. When they have offered us more money to take over a location than our store there could earn over many, many years, we’ve accepted offers.”
Lampert said the company is positioning itself to adapt to the changing retail environment.
Circling back to the landline telephone analogy, Lampert noted that many major phone companies were dissolved with the rise of the cell phone because they failed to innovate.
“Few of the old landline equipment stations I mentioned above are still in the hands of the Baby Bells or their successors,” he wrote, referring to the regional telephone companies that were formed from the breakup of AT&T — or “Ma Bell” — in 1984. “In fact, the only surviving descendants of ‘Ma Bell’ are the companies which realised early that mobile and data represented the future of their industry as opposed to Plain Old Telephone Service — and invested and readjusted their portfolios accordingly.”
Sears, which closed 200 stores in 2014, posted its tenth straight quarterly loss in December.
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