Sears will probably not recover from its decades-long decline.
“As a retailer they’re at the point of no return,” said David Tawil, cofounder of Maglan Capital and an expert in distressed retail companies. “The real question now is when does it all end?”
Sears recently confirmed reports that it was planning to close more stores and lay off workers. The company, which has currently has 800 namesake stores and 1,100 Kmart stores, has lost $US6 billion since 2012. Suppliers are growing concerned that they won’t receive payments for merchandise.
Sears is lacking the cash or vision to make a turnaround possible, said Tawil, who has invested in many struggling retailers.
“Sears hasn’t invested any money into stores, which makes it difficult to retain or attract customers,” Tawil said. “The company doesn’t seem to have a plan to fix this, making a turnaround impossible.”
Company chairman and CEO Eddie Lampert will need to spin off additional brands, as he did with Sears Auto and Land’s End, to generate more cash, Tawil said.
While this strategy might raise money in the short-term, it also leaves Sears a skeleton of what it once was and does nothing to attract new customers.
Retail analyst and author Robin Lewis believes Sears’ inevitable decline started decades ago.
He says that Sears spent too much time investing in side businesses and ignored the competition.
“This did not have to be fatal; however, it actually starved those resources (capital and management ) from the retail business, leaving it unable to respond and adapt to the needs of the evolving consumer and marketplace,” Lewis writes.
Sears felt invincible, and it didn’t respond to competitors like Wal-Mart, T.J. Maxx, and J.C. Penney Co., according to the book “The New Rules Of Retail,” co-authored by Lewis and Michael Dart.
Between 1998 and 2010, the number of competitors within a 15-minute drive from any Sears grew to 4,300 stores from 1,400, according to Lewis.
Sears could have fended off competitors by altering its strategy. Instead, the company became complacent, leading to a massive loss of market share.
Former Sears executive Steven Dennis believes the company will cease to exist in a few short years.
“Just about every action that has been taken over the last 10 years has weakened Sears competitive position,” Dennis wrote on his blog. “And the horrific results make this plain for all to see. The world does not need a place to buy a wrench and a blouse and a toaster oven.”
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