Outlook for Sears darkens

[Zayre88]

http://www.suntimes.com/business/741163,cst-fin-sears15web.article

Outlook for Sears darkens
RETAIL | Analyst: Chain 'completely wrecked'

January 15, 2008
BY SANDRA GUY sguy@suntimes.com

Hedge-fund guru Edward S. Lampert's magic touch seems to have rusted as Sears looks more and more like a gasping retailer.

Sears' disappointing holiday sales and earnings mean that the value of its brands and real estate is declining, and it's time for drastic measures, two retail analysts said Monday. Their assessment came after Sears reported that its holiday sales fell, and it would miss earnings forecasts for the quarter and the 2007 fiscal year.

Sears' shares plummeted below $90 for the first time in three years, before finishing the day Monday at $91.38, down $4.79 or 5 percent. The price compares with Sears' share-price high of $195.18 in April.

Sears said its profit in the all-important fourth quarter — the holiday season — will be $2.59 to $3.48 a share, far short of the $4.37 a share that Wall Street had forecast. Profit is forecast at $350 million to $470 million, down 43-to-57 percent from $820 million in the year-ago period.

Sales at stores open at least a year dropped 2.8 percent for the nine-week period ended Jan. 5, and declined 4.2 percent at Kmart.

Retail expert Howard Davidowitz said Sears Chairman Edward S. Lampert must consider hiring a new CEO, shuttering the Kmart chain, and closing poorly performing Sears stores.

"The company is completely wrecked," said Davidowitz, chairman of Davidowitz & Associates, a retail-consulting and investment-banking firm based in New York. "(Lampert) cannot cut any more in the stores, except to hire robots. There is no one in the stores."

Analyst Gary Balter of Credit Suisse said the Hoffman Estates-based retailer could sell off its better stores, sell its Canadian division or turn its real estate into a real-estate investment trust.

Sears has suffered earnings declines in the last three quarters, and is down to $1 billion in cash at the end of this fiscal year. Since Lampert took over the retailer in 2005, same-store sales have declined every quarter for Sears and all but two quarters at Kmart. The two exceptions were Kmart's sales increases of 0.3 and 0.9 percent — less than 1 percent.

Sears' woes come as middle-America shoppers are being battered by tighter credit and higher gasoline and grocery prices, hurting Sears' sales of tools and appliances. Yet Sears' competitors, ranging from Lowe's to Best Buy, keep opening new stores.

"I think Sears has to restructure its business," Davidowitz said.

[dmx10101]

well thats depressing. I hope they don't close Kmart...I'd rather they close Sears.

[Zayre88]

http://money.cnn.com/

Sears Is No Berkshire Hathaway, Just A Troubled Retailer

January 14, 2008: 03:00 PM EST

NEW YORK -(Dow Jones)- Sears Holdings Corp. (SHLD) may be just a run-of-the- mill retailer after all, and a troubled one at that.

It wasn't long after Sears merged with Eddie Lampert's Kmart just under three years ago that people began comparing Lampert, now Sears chairman, to the legendary Warren Buffett, and pundits proclaimed he'd turn Sears into another Berkshire Hathaway Inc. using all manner of financial maneuvering. Now, looking at Sears' Monday announcement of weak sales in November and December and a disappointing outlook for its fiscal 2008 results, it's hard to see the company as anything other than a couple of mature, cobbled-together, department-store chains, beholden to the same recession fears as any other company dependent on consumers.

Goldman Sachs, Deutsche Bank and Credit Suisse disappointing outlook for its fiscal 2008 to sell or a similar rating on Monday morning, and Sears said same-store sales fell 3.5% at Sears and Kmart combined during the nine-week period ended early this month, and its guidance for its February fiscal fourth quarter fell well short of Wall Street views. The news sent Sears shares to a new 52-week low. By blaming the woes on "increased competition and the negative impact of unfavorable economic conditions, such as a weak housing market and consumer credit concerns," it did little to stop speculation that the doldrums will continue well into its next fiscal year.

In any event, Sears has come a long way, the wrong way, from speculation that Lampert would combine Sears with the AutoZone Inc. (AZO) auto-parts retailer he controls, a seemingly logical fit with the many Sears auto centers nationwide. More recently, there was speculation Lampert might even make a play for Home Depot Inc. (HD), but those rumors died down almost as quickly as they started.

All the while, supporters have also been crowing that the value of the vast real-estate portfolio owned by Sears and Kmart could be unlocked and used to deliver enormous shareholder value. That, too, has failed to come to pass.

Davidowitz Sees The Worst

Howard Davidowitz, chairman of Davidowitz & Associates Inc., a national retailing consultant and investment bank based in New York, colorfully and vociferously disagreed with anybody who thinks Lampert can or will do anything to turn Sears into a Berkshire Hathaway clone.

"Sears is the Titanic," Davidowitz said, and Monday's news only served to confirm the inadequacy of Lampert's strategy and vision. Lampert was a brilliant hedge fund manager, he said, but his retail plans have failed miserably.

Where competitors invested in their stores and their managers, Lampert turned his back on customers by doing away with promotions, closing and selling the best stores, and spending money buying back stock instead of enhancing underperforming Sears and Kmart locations.

"Eddie Lampert is in survival mode," Davidowitz said, and his only option is to slim down Sears, hire top-notch retail management and invest in making the stores he has left succeed. Even if he does these things, Davidowitz doesn't think his chances of success are better than 50/50, given the poor state of the economy as it relates to consumers, credit and real estate.

Davidowitz doesn't think Lampert will throw good money after bad in an attempt to make Sears anything like Buffett's legendary investment vehicle, and said anybody who believes he'll magically unlock the value of his real estate is gravely mistaken.

It could take 15 years or more to liquidate Sears' real estate, and the cost of doing so would be astronomical, he said. Davidowitz praised Lampert's buy of Kmart as one of the greatest acquisitions of value at a deep discount he has ever seen, but said Lampert's should have stayed a hedge fund manager.

-By Maxwell Murphy, Dow Jones Newswires; 201-938-5173; maxwell.murphy@ dowjones.com

[dmx10101]

the stupid CEO needs to go..They need somebody willing to help keep the stores alive and looking good.

[Ameskid]

Originally posted by dmx10101
well thats depressing. I hope they don't close Kmart...I'd rather they close Sears.

Agreed!  Kmart is mainly a scaled-down, more discount version of Sears; in my opinion, that's better.

[beachgal26]

I guess that I would make a lousy businessman since I would not tinker with a store that is doing well.  Whoever had the original idea to link Sears (who has a stellar reputation) with a past-prime chain like K-Mart does not understand the first thing about making money!

With so many stores to choose from, I don't miss K-Mart (especially since we have none in our area anymore), but I would miss the tool and appliance area of Sears that I have supported for over 35 years.  They still do have good products and unless they could come up with some combo store, it would be a shame to lose the Craftsman line.

:no:

[Kmart4life]

Kmart is still way better then Sears  and if Sears doesn't get their ducks in a row then we may see the demise of both companies before the end of 2008

[Caldor1999]

im not shocked sears is going to end up just like montgomery ward and they really shouldent have done the merge with kmart i mean i dont care i they go out but i find sears to be more useful then kmart sears always has something if you cant find it anywere else i think sears should ditch there clorthing line and just stick to seeling tools ovenes washers AC's ect ect and also maby just get rid of kmart i mean they did not do to much to improve them as it is

[Zayre88]

I agree, it's not a surprise.  Sears is the same old Sears of 1990 or even 2000!!  Same old stores, sales, merchandise, prices but a new logo.  The mix of Kmart and Sears is a very small effort to improve and it's simply a mix of logos on buildings, colors and brand names.  The only thing they truly created is Sears Grand.  With that, they try to copy Wal-Mart in a way but they don't even expand and open Grand stores nationwide...  think small.

[Zayre88]

http://www.bloggingstocks.com/2008/01/19/lampert-looks-to-shake-things-up-at-struggling-sears/

Lampert looks to shake things up at struggling Sears
Jan 19th 2008 12:10PM by Zac Bissonnette

As my colleague Douglas McIntyre pointed out this morning as well, Sears Holdings chairman Ed Lampert wants to shake things up at the struggling retailer.

According to the Wall Street Journal, Lampert "plans to reorganize the 121-year-old retailer into several businesses with broad authority to shape their own future."

Lampert will essentially adopt a holding company structure for the company: real estate, brands, operating businesses, online, support, and other.

When naming Lampert the worst CEO of 2007 (although, as Greenberg notes, the sorry distinction of being Sears' official CEO goes to Aylwin Lewis), Herb Greenberg blamed a big part of Sears' problems on capital allocation: "Lampert's mantra has been profits over sales, which makes sense if it works ... So far, for all of Sears, including Kmart, the strategy has failed miserably."

Shifting the corporate structure is probably just rearranging deck chairs on the Titanic -- the real problem for Sears as a retailer is its failure to invest and keep up with faster moving competition.

[NJxxJon]

and..........

http://www.washingtonpost.com/wp-dyn/content/article/2008/01/19/AR2008011901898.html?hpid=moreheadlines


Washington post baby!

[Ameskid]

Originally posted by beachgal26
I guess that I would make a lousy businessman since I would not tinker with a store that is doing well.  Whoever had the original idea to link Sears (who has a stellar reputation) with a past-prime chain like K-Mart does not understand the first thing about making money!

With so many stores to choose from, I don't miss K-Mart (especially since we have none in our area anymore), but I would miss the tool and appliance area of Sears that I have supported for over 35 years.  They still do have good products and unless they could come up with some combo store, it would be a shame to lose the Craftsman line.

:no:

Um, since Kmart and Sears have merged, Kmart has been carrying Craftsman tools.  They've been doing this for a while now.

[dmx10101]

Originally posted by Ameskid

Originally posted by beachgal26
I guess that I would make a lousy businessman since I would not tinker with a store that is doing well.  Whoever had the original idea to link Sears (who has a stellar reputation) with a past-prime chain like K-Mart does not understand the first thing about making money!

With so many stores to choose from, I don't miss K-Mart (especially since we have none in our area anymore), but I would miss the tool and appliance area of Sears that I have supported for over 35 years.  They still do have good products and unless they could come up with some combo store, it would be a shame to lose the Craftsman line.

:no:

Um, since Kmart and Sears have merged, Kmart has been carrying Craftsman tools.  They've been doing this for a while now.

Also Kmart bought Sears so uh Kmart linked with Sears so they could make more money.

[Zayre88]

Another long but good article about Sears & Kmart and Eddie Lampert.

http://www.portfolio.com/news-markets/national-news/portfolio/2008/01/14/Kmart-Sears-Merger?page=0

The Marriage From Hell
by Jesse Eisinger  February 2008 Issue

[NJxxJon]

Originally posted by Zayre88
Another long but good article about Sears & Kmart and Eddie Lampert.

http://www.portfolio.com/news-markets/national-news/portfolio/2008/01/14/Kmart-Sears-Merger?page=0

The Marriage From Hell
by Jesse Eisinger  February 2008 Issue

\


Sadly sears has been around for SO LONG....with my dad having a credit card opened up from the 80s!!!! :D

[Zayre88]

The topic is: «Stores Shutting Down This Year» .  With more fears for a recession, Sears and Kmart are vulnerable retailers.  Store closings may be on the way this year, maybe even the closing or selling of one chain...

From a Chicago Tribune article: « Displaying a dartboard approach, hoping something hits a bull's-eye, Lampert is trying many approaches at many stores to revitalize them.»

The company tried so many concepts without any clue hoping that something would stick.  Sears grand, Sears Essentials, Kmart stores that are now Sears stores, Kmart Orange concept, K-mart lime & green, vintage Sears Gwinnett Mall, Big Kmart, new logos, Sears brands inside Kmart, Lands End inside Sears mall stores and/or former Kmart now Sears, formerly Sears Essential that also used to be a Big Kmart that replaced Kmart.

They had to choose something and roll out a strategy nationwide, sadly they didn't...

[dmx10101]

Originally posted by Zayre88
Another long but good article about Sears & Kmart and Eddie Lampert.

http://www.portfolio.com/news-markets/national-news/portfolio/2008/01/14/Kmart-Sears-Merger?page=0

The Marriage From Hell
by Jesse Eisinger  February 2008 Issue

Excellent article. It just solidifies my point that Eddie is an idiot. If he wasn't running things I think Kmart and Sears would be in a lot better shape than they are now.

[davidsky]

I think Sears could survive as an online entity only.

[Zayre88]

From a New York Times article about Sears:

«But Sears Essentials flopped. It was not because Kmart shoppers rejected Sears products, but because the experiment seemed to consist only of tossing Kenmore stoves and Craftsman hammers into an old Kmart store, rather than creating a vibrant new shopping experience. »

http://www.nytimes.com/2008/01/27/business/27eddie.html?_r=1&oref=slogin&pagewanted=print

[dmx10101]

Originally posted by Zayre88
From a New York Times article about Sears:

«But Sears Essentials flopped. It was not because Kmart shoppers rejected Sears products, but because the experiment seemed to consist only of tossing Kenmore stoves and Craftsman hammers into an old Kmart store, rather than creating a vibrant new shopping experience. »

http://www.nytimes.com/2008/01/27/business/27eddie.html?_r=1&oref=slogin&pagewanted=print

Another good article. I still believe that if they put some money into fixing up Kmarts that they will be in alot better shape.

[XISMZERO]

I think the move ought to include another massive closing of under-performing, existing Kmart stores -- ones that might be too clustered. It's inevitable to save them. Then, you tackle individual stores by launching a real revitalization campaign which includes extensive remodeling in and out and obliterating the "Big K" nameplates.

Problem is, I think they're in far too deep to save themselves that much.

One can only imagine if Sears started closing shuttering some stores -- most of which are located within major shopping malls.

Ultimately, I can't see names like Sears and Kmart ever disappearing. What's more Americana than that?

[BillyGr]

Maybe it's not that there is an Eddie in charge, maybe they just need a better one (like the former chairman who just died recently (Ed Brennan) that turned it around in the 80's).

[Caldor1999]

Originally posted by davidsky
I think Sears could survive as an online entity only.

i still think they can go on as a store they just need to ditch kmart and get rid of there clothing line cause not to many people by clouths from sears they sould stick to hardwere and applincenes thats what sears has that is good

[Zayre88]

My parents will make a trip to Florida in april and i looked up the Clearwater area for them using http://maps.live.com/
Many stores are located on Gulf to Bay boulevard including a former K-mart that is turned into a Sears Essentials according to the "Bird's eye picture" provided.

It's really sad too see that old grey building from the 70's with a cheap paint job and a Sears logo.  The parking lot is 95% empty.  That store is clearly unable to compete with other retailers down the road like Home Depot, Lowe's, Target and others.

Whatever the time of day the pictures were taken, it's clear that Sears is in deep trouble with stores like that.  Not far away from that Sears store, Target has a large, modern, clean looking store and they have lots of customers.

A picture is worth a thousand words for Sears, what do you think?

[XISMZERO]

Originally posted by Zayre88
A picture is worth a thousand words for Sears, what do you think?

The next move is to start closing up under performing stores across the board from Sears to Kmart, like Kmart did after the millennium.

With many Sears within malls, who would steal their thunder?

[beachgal26]

While I realize that most of you wouldn't miss Sears, it is such a shame that one of the pioneers of both retail and catalog sales would go the way of Wards.  I remember them both from having shopped at them my whole life and each had items that the other didn't, so it made for some nice comparison shopping.  Oh well, another one bites the dust...

Since K-Mart has almost completely pulled out of the Memphis market (down from 5 stores to 1 remaining one in a terrible neighborhood), if Sears closes, we will be left with no good places to shop for appliances and tools.  I have used Kenmore and Craftsman items forever and you can't beat their reliability.

While I do agree that the Sears stores have gone downhill in recent years, they still do offer a good buy for the money.  The closest location is about 5 minutes from me and is always busy with shoppers, so it's hard to tell if it is just this market or what.

:o

[C. Fontaine]

I'll miss sears.  Their stores, at least before Sears Essentials came along, always had their own sort of clean look and feel.  It wasn't every day you saw carpeting and escalators in a department store.  I am also a fan of Craftsman tools, the lifetime warranty is a nice thing to have!

[Anonymous]

There is a sears by me that used to be a kmart that looks just like the one pictured but with event less customers. It was cheaply converted.

[Zayre88]

Originally posted by beachgal26
While I realize that most of you wouldn't miss Sears, it is such a shame that one of the pioneers of both retail and catalog sales would go the way of Wards.  I remember them both from having shopped at them my whole life and each had items that the other didn't, so it made for some nice comparison shopping.  Oh well, another one bites the dust...

:o

I'll miss Sears too and i'll have to look for a new job...  I'm just mad at them for letting things go the way thay are today.  

Kmart filed for Chapter 11 bankruptcy protection, closed nearly 500 stores, pulled out of many markets... they closed several Super Kmart stores and even closed some of their larger modern stores while older stores didn't have a dime to renovate.  

Kmart bought Sears, they launched Essentials, scrapped it, released 3 or 4 logos and concepts for the two chains, they now see a slowdown in sales and profit, the shares went from $193 to 90$, they fired Bob Vila, they will pull out of Nascar truck series, executives are leaving, they fired 200 workers at the headquarters...

I just don't see where they're going with that, they look lost and messed up compared to Target, Kohl's and Wal-Mart.

[dmx10101]

Originally posted by Zayre88

Originally posted by beachgal26
While I realize that most of you wouldn't miss Sears, it is such a shame that one of the pioneers of both retail and catalog sales would go the way of Wards.  I remember them both from having shopped at them my whole life and each had items that the other didn't, so it made for some nice comparison shopping.  Oh well, another one bites the dust...

:o

I'll miss Sears too and i'll have to look for a new job...  I'm just mad at them for letting things go the way thay are today.  

Kmart filed for Chapter 11 bankruptcy protection, closed nearly 500 stores, pulled out of many markets... they closed several Super Kmart stores and even closed some of their larger modern stores while older stores didn't have a dime to renovate.  

Sears bought Kmart, launched Essentials, scrapped it, released 3 or 4 logos and concepts for the two chains, they now see a slowdown in sales and profit, the shares went from $193 to 90$, they fired Bob Vila, they will pull out of Nascar truck series, executives are leaving, they fired 200 workers at the headquarters...

I just don't see where they're going with that, they look lost and messed up compared to Target, Kohl's and Wal-Mart.

Kmart bought Sears..