Sears Needs to Get Real
by George Anderson
is something missing from the reporting we’ve seen on the latest
results from Sears Holdings. Virtually all the coverage online,
in print and on broadcast media has talked about how the company
has had to cut back in light of the recession. Some reports even
include an analyst or two talking about how Sears is doing the
right thing in finding ways to control costs.
and listening to this stuff, we recently found ourselves channeling
our long-departed, grocery store manager of a father. A voice with
a deep Jersey City accent we don’t possess, blurted out, “Are you
fa real? Git atta here b’for I…” Fortunately, with young children
in the next room, we were able to gain control of the invading
spirit and not mutter what usually followed from dear old dad’s
lips so many years ago.
for those who haven’t been paying attention, had been watching
its sales go south pre-Edward Lampert. Since taking over the company,
however, Mr. Lampert has turned in same-store sales declines with
a systematic precision that would be awe-inspiring were it not
Lampert has managed to stay ahead in the minds of investors and
others expecting him to prove that he really is the next Warren
Buffet by finding ways to cut costs at Sears or deliver revenues
from investments not connected to selling goods.
failure to invest in the store experience has become a self-fulfilling
prophecy where fewer shoppers (each and almost every quarter) go
to the chain’s stores or website to purchase goods.
path to failure has been amazingly straight and Mr. Lampert and
company (AKA the execs who won’t tell him that he has no merchant
DNA in his body) have not strayed. That’s why as sales continue
to fall, Sears continues to cut one of the few ways it has to get
more people in the store. The chain reduced ad expenditures by
$107 million in Q1 ’09 and $45 million in Q2 (some of the $45 mil
comes from Sears Canada, Crain’s reports). Last year, $94
million was lopped from the ad budget.
demonstrate how committed Sears is to growing sales (not), W. Bruce
Johnson, the company’s interim CEO, said in a press release, “We
continue to take actions to increase the efficiency of our operations.
We have reduced our selling and general administrative expenses
by approximately $1 billion over the past four quarters, including
a reduction of $212 million this quarter.”
Questions: What is the biggest impediment to Sears growing its
sales? Will the chain ever be successful under Edward Lampert?
Holdings Reports Second Quarter Results – Sears
Lampert’s Sears experiment looking like a failure – BloggingStocks
axes ad budget as sales slide – Crain’s