Sears Looks to the Future
By George Anderson
The good news: Sears Holdings reported that its profit for the fourth quarter more than doubled from the previous year as a result of the company’s efforts to drive costs out of its operations.
The worrisome news: While profits were up, same-store sales at Sears’ locations were down 12.2 percent during the period.
The encouraging news: Same-store sales were up 0.9 percent at Kmart stores during the fourth quarter, the first time the chain experienced a year-over-year quarterly improvement since the second reporting period of 2001.
The what’s next news: In a letter to investors, Sears Holdings’ chairman Edward Lampert admitted that the company had wrung just about all it could out of the savings end of the business and would focus on “the tasks of testing, adapting and executing.”
Mr. Lampert did reiterate that, while sales growth was an objective, it would not be accomplished at the expense of profits.
“While reducing sales is not a prescription for success on a base of healthy, profitable stores, it can be a prescription for success where profit was not the primary objective and where sales came from ‘giving product away’ rather than from providing value to the customer,” he wrote.
“Improving our stores and our store experience will take time, and I am pleased with the progress that we have made to date.”
Sears Holdings’ chairman also made clear that the company would determine its own metrics for success. He took particular issue with same-store sales as a gauge of progress,
suggesting the measurement had “significant limitations.”
Moderator’s Comment: Now that it has captured, in Edward Lampert’s words, “all the low hanging fruit,” where does
Sears Holdings go to profitably improve its sales performance at Sears and Kmart respectively? –
George Anderson – Moderator
- Profit More Than Doubles at Sears Holdings – The Associated Press/The New York Times
(free reg. required)
uses letter to vent, explain and chat – MarketWatch