NEW YORK – Its like watching an old friend slowly fall apart.
Sears was once the place where families could go for an afternoon of one-stop shopping for everything from clothing to appliances to car parts. But it has struggled in recent years amid declining sales and stiff competition.
Now, Sears, which runs 2,500 Kmart and Sears stores, is considering separating its Lands End catalog business and Sears Auto Center businesses from the rest of the company. The retailer also plans to continue closing some of its unprofitable stores.
The announcements came Tuesday as Sears warned that it expects a loss of $582 million in the third quarter. The company said that for the 12 weeks that ended Saturday its sales at stores open at least a year fell 3.7 percent.
(Sears) equity remains a melting ice cube, with asset sales and spinoffs the clearest path to justifying the share price, said Greg Melich, an analyst at International Strategy & Investment Group LLC.
The news underscores the intense pressure facing billionaire hedge fund manager and chairman Eddie Lampert, who took over as CEO in February to turn around the business. The storied retailer hasnt adapted as bigger, nimbler rivals such as Wal-Mart and Home Depot have stolen away customers over the years.
Last year, Sears announced plans to restore profitability by cutting costs, reducing inventory, selling off some assets and spinning off others. Those moves helped it reduce net debt by $400 million and generated $1.8 billion in cash from the asset sales in the latest fiscal year.
Sears also has been building a loyalty program called Shop Your Way, which accounts for 65 percent of its sales and has tens of millions of active customers.
But critics say Sears hasnt managed to solve its core problem: Its stores arent inviting to shoppers. The stores are horrifically out of date, said Brian Sozzi, CEO of Belus Capital Advisors.
The shopping experience is depressing.