Sears losses could signal death
Sears Holdings Corp. reported a 48% decline in quarterly profits as sales continued to fall at its Kmart and Sears stores. Will the slowing economy mean the death of the struggling retailer? Dan Grech reports.
A Sears sign and a Kmart sign (Justin Sullivan/Scott Olson/Getty Images)
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KAI RYSSDAL: Moving on now to other companies and their customer's interests. Sears reported a 48 percent drop in quarterly profits today. Yes, a faltering economy had probably something to do with that. But Sears has been falling behind its competitors for years. Now there's speculation the 121-year-old retailer's very survival is on the line. Marketplace's Dan Grech has more.
DAN GRECH: There was a time when the Sears name alone might have been insulation against these tough times. No longer, says Joel Naroff, chief economist of Commerce Bank.
JOEL NAROFF: A lot of consumers, especially the younger consumers, are looking for the newest things. They're not married necessarily to an individual brand name, so maintaining brand loyalty, especially for an older brand, becomes extremely difficult under these circumstances.
Hedge fund manager Edward Lampert took control of the Sears and Kmart chains three years ago. Same-store sales at both chains have declined every quarter since then. Retail consultant Howard Davidowitz says the country's sixth largest retail company is losing out to more efficient, better stocked, less expensive competitors.
HOWARD DAVIDOWITZ: Like a Target, like a Wal-Mart, like a Penny's. The consumers are voting with their feet.
Last month Sears Holdings announced another corporate reorganization. Board Chairman Lampert ousted the CEO and cut 200 jobs at headquarters. Several top executives then left the company, and the search for a new CEO continues. Davidowitz says the weak consumer economy couldn't come at a worse time for Sears.
DAVIDOWITZ: That is just going to of course magnify Sears' problems. The worst is yet to come and I think these negatives are going to accelerate as we go forward.
He says the company's real estate may soon become more valuable than its retail stores.
I'm Dan Grech for Marketplace.
