Who Killed Sears? 50 Years on the Road to Ruin

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Sears Holdings Corp has announced that it would close 72 Sears and Kmart stores. It followed that cull with another 20 the same month, then 43 the following month, 28 that August, 63 that November and 103 on Jan. 4, 2018. Nor is the company just shedding locations (and the staff that work at them): the Wall Street Journal reported on Oct. 24 that Sears will no longer sell the Whirlpool appliances it’s carried since 1916. An internal company memo cited pricing disputes.

The bad news coming out of Sears is steady to the point of being tedious. The overall message, as the company warned investors in March, is that after a six-year, $10 billion losing streak with no turnaround in sight, “substantial doubt exists related to the company’s ability to continue as a going concern.” So what happened?

A Tale of Retail Hubris

It started by selling a single product, but when it became clear that a sleepy, over-priced retail sector would crumple before it, there was nothing to stop the company from selling everything. You could order from the comfort of your own home. You could pay a fair price. They would ship the goods right to you. Sales exploded, and if you’d picked up a big enough chunk of stock when the company went public, you’d never have to work again.

That description once applied to Sears, Roebuck and Co., but now it better describes the company that’s blamed for – or credited with – its looming demise, Amazon.com Inc.

Having played the role of upstart retail juggernaut in the 1890s, Sears now finds itself in the same position as the rural general stores it used to drive out of business en masse. (See also, Why Retail Layoffs Are on the Rise.)

On the other hand, Sears’ demise is not all Amazon’s fault, nor is it a simple circle-of-life parable. Sears has made its share of mistakes.

In its 2016 annual report, the company listed Wal-Mart Stores Inc. (WMT WMT Wal-Mart Stores Inc 101.61+1.48%), Target Corp. (TGTTGT

Target Corp 67.18+0.95%), Kohl’s Corp. KSS Kohl’s Corp 56.90+4.67%), J.C. Penney Co. Inc. (JCP JC Penney Co Inc 3.71+2.77%), Macy’s Inc. (MM Macy’s Inc 24.44-0.16%),
The Home Depot Inc 192.04-0.24%), Lowe’s Companies Inc. (LOW LOW Lowe’s Companies Inc 93.71-1.09%), Best Buy Co. Inc. 
Amazon as its main competitors. As of June 7, Sears has lost 38.0% of its value since it began trading under its current ticker in May 2003. J.C. Penney has done even worse, but Lowe’s, Best Buy and Home Depot have all seen their share prices at least double. Amazon’s are up nearly 33-fold. Even for a brick-and-mortar retailer in the digital era, Sears is struggling. 

Sears Holdings Corporation (NASDAQ: SHLD) is a leading integrated retailer focused on seamlessly connecting the digital and physical shopping experiences to serve our members – wherever, whenever and however they want to shop.