Recently, a blog post entitled, “18 Depressing Photos That Show Why Nobody Wants to Shop at Sears,” went viral, attracting more than a quarter of a million views. The photos showed rundown locations with barren shelves and little signs of customer activity.   However, the hedge fund manager, Edward S. Lampert, who is the majority owner and CEO of Sears, believes that the photos of these core Sears stores represent the future of the retailer.

In October, Sears announced that it was going to split off Lands’ End and the Sears Auto Center brands in order to raise cash and become a “more focused company” according to company statements. Lands’ End will be spun off into a new public company.  Sears will likely try to find a buyer for the Sears Auto Centers. In this same announcement, Sears also indicated that its same store sales were down 3.7% from the same quarter in 2012.

Retail analysts are now suggesting that Sears is in a rapid deceleration and is losing under the pressure of Walmart, Target, Home Depot, and Amazon.com.   Analysts also speculate that after losing the assets of the auto centers and Lands’ End, that it is only a matter of time before the company begins liquidating.  Analysts speculate that Sears Canada, Kenmore, and Craftsman will be some of the first brands to go.  According to Credit Suisse, there is more value in Sears when it is broken up than there is when it is together.

After the liquidation efforts, all that will remain of Sears and Kmart are the stores, many of which are suffering.  Sears has indicated that it intends to close more stores while trying to minimize the associated costs.  Closing stores can often increase costs due to severances, pension obligations and real estate costs.

Discussion Questions:

What is Sears’ plan going forward?

What are the advantages and disadvantages of such a plan?

If you were offered a job at Sears, would you take it? Why or why not?

 

SOURCE: David Gelles, New York Times, October 28, 2013