“The stores are creepy,” said shopper Chris Angelos, with few customers, a limited selection and whole sections closed off in the cavernous location near her home in Gurnee, Ill. The 69-year-old said she shops there anyway because it lets her avoid crowds and park near the front door.
Articles about the impending death of Sears Holdings(SHLD) are beyond cliche at this point. For how many years can vendors squeeze on terms, not wishing to risk not getting paid, while CEO Eddie Lampert lends the company money and rails against the “fake news” about Sears’ dire financial condition. A recent article in the Wall Street Journal is the latest. It is respectful, well-written, and damning.
The above quote says it all. Sears typical customer is a retiree who likes to avoid crowds. What better place to be alone than in a Sears store?
It’s not about failing to turn around a brand, it’s about failing to execute. The appliance and services division should be the crown jewel of the company. These are big ticket items with good margins. Besides cost, appliance buyers buy based on customer service. Yet, everyone I’ve spoken to who has purchased a Sears appliance has had a problem with their delivery and then a hellish experience trying to get it remedied. The company’s recent loss of Whirlpool(WHR) as a vendor after nearly a century is emblematic of this. Sears had fallen from 20% of Whirlpool’s sales to 3%.
Sears services division should be a profit center. Instead, Sears awful brand reputation and awful service have rendered it nearly worthless. Are there assets left in the company with value? Yes, but they are increasingly distressed. Lampert is left with few moves to avoid what appears to be an inevitable checkmate.
Disclosure: The author holds no shares in any stock mentioned