Is this the last Christmas for Sears?


New York
CNN Business

Tracy Easterling spent about an hour shopping Sunday at Sears, which used to be one of her favorite stores. She had nothing to show but memories.

Easterling was at the Sears in her hometown of Jersey City, New Jersey, one of 15 full-line Sears stores still open. Sears was once the largest and most important retailer in the world.

“This is the first time I’ve been here in a while,” she said as she browsed the shoe selection, where the shoes were still boxed up rather than out on display.

“I came in looking for sales. But it’s so empty, and there’s not much to choose from,” she said. “Back in the day you could come in and get most everything you wanted in one store.”

Easterling said that when she told her friends she was going to stop at Sears, their responses were: “Is Sears still open?”

“Look at it. It’s as empty as can be,” she said looking down passes without seeing any other customers, despite the shoppers being out in force on the weekend after Thanksgiving.

Most of the shoppers in the Jersey City store Sunday were older, and like Easterling, could remember Sears in its day.

Many of them quickly left without finding out what they were looking for. Some of the younger shoppers said they only stopped leaving because they could remember coming in as a child.

“I was shopping here years ago with my great-grandmother,” said Razeyah Surrell, 23, who came in search of a pair of pants while shopping with her friend Taryn Reczkowski, 22. They quickly left after Surrell was able to find what he had. was looking for.

“I walked in and said, ‘Wow, this is sad,'” Reczkowski said.

It was a slow, quiet death for an iconic chain, which had both Amazon ( AMZN ) and Walmart back in its day when Sears had its brand new catalog and anchor location at many malls across the country.

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When Sears and Kmart merged in 2005, they counted 3,500 US stores between them and more than 300,000 employees. But both brands were already in a downward spiral. After the merger the company focused on selling its more attractive real estate and buying back stock in an effort to boost its declining share price, rather than investing in modernizing stores to make them competitive.

By 2018 the company had filed for bankruptcy. Eddie Lampert, the hedge fund operator who engineered the disastrous Kmart merger and served as CEO of the holding company, bought the remains of the business out of bankruptcy in early 2019. He promised to turn things around after to spend his debt. , unprofitable stores and less attractive leases.

The company that emerged from bankruptcy in early 2019 – with the overly optimistic name Transformco – owned 223 Sears and 202 Kmart stores across the country. But less than four years later, it’s barely on life support, as evidenced by the miniscule brick-and-mortar footprint and lack of shoppers.

Now experts say there is little or no reason to keep even the handful of stores it has open.

“Sears has been going down the drain for a long time. There is no chance of it being revived,” said Neil Saunders, managing director at GlobalData Retail. “No one but Eddie Lampert knows why he’s keeping these stores open. You can’t make the economics work with that number of stores.”

As for why Sears hasn’t pulled the plug yet, Saunders said, “There may be a penalty in certain contracts or agreements if it closes all the stores. Or maybe they are open because Eddie Lampert has a very strange view of business. He still seems to be clinging to this illusion that he can bring it back. A lot of it could be because of ego.”

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While the company may now seem doomed, it didn’t have to be this way, argues Mark Cohen, director of retail studies at Columbia University and former CEO of Sears’ Canadian unit before the Kmart merger.

He said Sears’ experience operating its catalog, which had a comprehensive list of products, positioned it better than other traditional retailers to move early into online sales. And he said Sears had better lease agreements than competing department store chains.

“It could compete with Amazon. It was the Amazon of the day,” Cohen said. “Sears would no doubt have to close stores and consolidate holdings, but its real estate holdings would not be the albatross they have been for other department store chains. Nothing would stop him from having a second life as a world beater. At the end of the day, it all came down to the incompetence and dysfunction of his leadership.”

If — or perhaps when — Sears closes its final store, it will join a long list of retailers including RadioShack, Payless Shoes, Gymboree and American Apparel, which have emerged from bankruptcy only to go out of business followed soon after.

It is difficult to get an exact count of the company’s remaining open stores. The total number of 15 Sears outlets remaining is down about a third from 23 at this time last year. But those numbers come from what’s listed in the store locator on the company’s website. Spokesmen from hedge fund Sears, Transformco and Lampert did not respond to questions about the number of stores remaining, the company’s profitability or its future plans.

The Sears name may live on even if the last full-line stores close.

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After emerging from bankruptcy, Transformco bought the holding company it had previously spun off, including a franchisee-owned chain of stores operating under the Sears Hometown name. The stores are a fraction of the size of the full-line Sears and focus on selling appliances, tools and outdoor equipment.

There were about 700 of those stores just before Transformco successfully repossessed Sears Hometown in 2019, but they’ve also been steadily closing. About 100 stores closed earlier this year, leaving just over 100 open today.

Kmart shrunk to an even smaller size.

A year ago there were only six Kmart stores in the mainland US, with six more across Puerto Rico, Guam and the US Virgin Islands. The store in Puerto Rico has since closed and only three stores remain on the mainland, one each in Florida, New Jersey and Long Island, New York, according to Dick Barta, a former Kmart employee who has a keen eye on closing shops. the years. Kmart’s website backs up those numbers.

The holiday shopping season is off to a strong start, and that might help keep Sears breathing a little longer. But if the U.S. economy ends up in a recession as many economists fear, it could be the last one to end, said Katie Thomas, head of the Kearney Consumer Institute, an in-house think tank at a consulting firm. Kearney.

“It’s hard to make a case that consumers will go to those stores if they’re holding back on spending,” she said. “I think that [a recession] it may be the final nail in the coffin.”

As for when Sears might finally close the last remaining stores, Cohen said it’s not important at this point.

“2005 was the time of death,” he said, referring to the year Lampert took control of the company.

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