Sears Predicts Own Demise

[Bible_Belt]

http://www.latimes.com/business/la-fi-sears-20170322-story.html
Sears has 'substantial doubt' that it will survive

According to a regulatory filing late Tuesday, the company lost more than $2 billion last year. Adjusted for one-time charges, its loss was $887 million.

Sears, which employs 140,000 people, announced a major restructuring plan in February with hopes of cutting costs by $1 billion through the sale of more stores, jobs cuts and brand asset sales.

Longtime rivals such as Wal-Mart and Target are spending heavily to revitalize stores and are intensely focused on a new type of shopper: One who goes online before stepping into a store.

In its most recent quarter, Sears, based in Hoffman Estates, Ill., just northwest of Chicago, lost $607 million. Revenue was $6.05 billion, down from $7.3 billion during the same period the year before.

It was the sixth consecutive quarter of losses. The company has not turned an annual profit since 2011.

 

[speed dawg]

Seems like all the 'general goods' type stores are losing. Specialized stores, in particular revolving around health/wellness, continue to do well, even if brick and mortar. Just goes to show that you have to always be evolving and changing.

 

[Desdinova]

Fvcking Sears. The common thought was that Sears had good quality stuff. Since I'm very much anti-Walmart, I decided to start shopping for my kid there. Backpack lasted one week before breaking. Sandals lasted one month. What fvcking Chinese city are they ordering this garbage from??? And their 5hit isn't cheap either!

I used to love department stores. Now I fvcking hate them.

 

[Bible_Belt]

I knew it was over when they sold off the Craftsman tools brand to Stanley. Craftsman mowers and cordless tools have been garbage for a long time, but Craftsman hand tools used to be the best there was. They once had a no-questions-asked, free in-store replacement warranty. If you found a way to break it, they would give you a new one the same day. Those days of high quality products as a business model are long gone. Now that Stanley owns the Craftsman label, you will start seeing Craftsman tools at Wal-Mart, which are the same Stanley crap, just at a higher price.

 

[Billtx49]

Most big box brick and mortar stores will go away within the next decade or two as more consumers migrate to online shopping. The only product exceptions I can see surviving short term are catagories like clothing if you do not already know the quality, texture, and fit size. Consequently they must be seen in person now, but as online shoppers become more product aware that may eventually go away also.
Probably about 90% of consumer goods can be bought online with confidence now without a store visit at all. Free shipping, sometimes no sales tax, and time saving being a big draw there.
When you see Walmart and Amazon actively exploring online grocery ordering with convenient pick up locations, it's a rapidly changing world via technology out there.
People always welcome convenience.

 

[taiyuu_otoko]

Retail in general is on its way out. Payless is declaring BK this week.

A giant wave of store closures is about to hit the US

The industry is heading into 2017 with a glut of store space as shopping continues to shift online and foot traffic to malls declines, according to analysts.

"If you are weaker player, it's going to be a very tough 2017 for you," said RJ Hottovy, a consumer equity strategist for Morningstar.

He said he's expecting a number of retailers to file for bankruptcy next year, in addition to mass store closures.

Nearly every major department store, including Macy's, Kohl's, Walmart, and Sears, have collectively closed hundreds of stores over the last couple years to try and stem losses from unprofitable stores and the rise of ecommerce.

Macy's has already said that it's planning to close 100 stores, or about 15% of its fleet, in 2017. Sears is shuttering at least 30 Sears and Kmart stores by April, and additional closures are expected to be announced soon. CVS also said this month that it's planning to shut down 70 locations.

Mall stores like Aeropostale, which filed for bankruptcy in May, American Eagle, Chicos, Finish Line, Men's Wearhouse, and The Children's Place are also in the midst of multi-year plans to close stores.

...

The US has 23.5 square feet of retail space per person, compared with 16.4 square feet in Canada and 11.1 square feet in Australia — the next two countries with the highest retail space per capita, according to a Morningstar report from October.

When an anchor store like Sears or Macy's closes, it often triggers a "downward spiral in performance" for shopping malls, Morningstar analysts wrote in the report from October.

The malls don't only lose the income and shopper traffic from that store's business. The closure often triggers "co-tenancy clauses" that allow the remaining mall tenants to exercise their right to terminate their leases or renegotiate the terms, typically with a period of lower rents, until another retailer moves into the vacant anchor space.

 

[Billtx49]

Retail in general is on its way out. Payless is declaring BK this week.

A giant wave of store closures is about to hit the US

The industry is heading into 2017 with a glut of store space as shopping continues to shift online and foot traffic to malls declines, according to analysts.

"If you are weaker player, it's going to be a very tough 2017 for you," said RJ Hottovy, a consumer equity strategist for Morningstar.

He said he's expecting a number of retailers to file for bankruptcy next year, in addition to mass store closures.

Nearly every major department store, including Macy's, Kohl's, Walmart, and Sears, have collectively closed hundreds of stores over the last couple years to try and stem losses from unprofitable stores and the rise of ecommerce.

Macy's has already said that it's planning to close 100 stores, or about 15% of its fleet, in 2017. Sears is shuttering at least 30 Sears and Kmart stores by April, and additional closures are expected to be announced soon. CVS also said this month that it's planning to shut down 70 locations.

Mall stores like Aeropostale, which filed for bankruptcy in May, American Eagle, Chicos, Finish Line, Men's Wearhouse, and The Children's Place are also in the midst of multi-year plans to close stores.

...

The US has 23.5 square feet of retail space per person, compared with 16.4 square feet in Canada and 11.1 square feet in Australia — the next two countries with the highest retail space per capita, according to a Morningstar report from October.

When an anchor store like Sears or Macy's closes, it often triggers a "downward spiral in performance" for shopping malls, Morningstar analysts wrote in the report from October.

The malls don't only lose the income and shopper traffic from that store's business. The closure often triggers "co-tenancy clauses" that allow the remaining mall tenants to exercise their right to terminate their leases or renegotiate the terms, typically with a period of lower rents, until another retailer moves into the vacant anchor space.

It's going to eventually be a shift from big box retail space to warehouse/shipping space usage. It's happening already at my location. Warehouse space being built out very rapidly.
Bottom line - We need to get lower consumer prices from retailers lower overhead after that shift happens, or it's a profit ripoff.

 

[taiyuu_otoko]

Bottom line - We need to get lower consumer prices from retailers lower overhead after that shift happens, or it's a profit ripoff.

A much deeper and more painful issue is few of those big box stores that are closing are paid for outright. Some fear it may lead to a cascade of commercial debt defaults in a year or two, perhaps even sooner.

You need much less space for warehouse/shipping than retail. Somebody is going to have to eat the difference.

 

[Billtx49]

A much deeper and more painful issue is few of those big box stores that are closing are paid for outright. Some fear it may lead to a cascade of commercial debt defaults in a year or two, perhaps even sooner.

You need much less space for warehouse/shipping than retail. Somebody is going to have to eat the difference.

The warehouse concept depends on them being able to successfully get out from under mall overhead. When they do, their monthly overhead is less. A fundamental marketing shift is already happening and their finances must shift also.The big mall stores will eventually close or have drastic downsizing.

 

[Bible_Belt]

The future retail stores will be warehouses. You order your stuff on your phone, then pull up outside, and robots bring it outside and load it for you. Ironically, it resembles the original retail stores, like the pre-WW2 grocery stores. You told the shopkeeper what you wanted, and his workers fetched it for you. The idea of pushing a cart around a big store to pick out your own stuff didn't become popular until the 1950's. Now that concept is dying, and we are going in a big circle, back to greater service, but this time accomplished with technology instead of human labor.

 

[speed dawg]

People enjoy shopping. I don't think brick and mortar will totally go away. I think it will certainly revolve around female type stuff though, with coffee shops and fru fru eateries.

 

[Desdinova]

I don't believe it will completely go away either. People are just shopping smarter and cheaper. When you need some new underwear because you fart-blasted a hole through your 2nd last pair, Walmart is there for you.

I believe that quality product may have a resurgence sometime in the future, although that time is not now. People want more bang for their buck because these businesses that are top-heavy with admin are charging way too much for 5hitty product. Why pay Sears $30 for a cheap watch when you can get one on Ebay for $0.01-$3.00? It makes no sense. If those watches drop to $7.00, then perhaps the few extra dollars are more worth it for the convenience of getting it today

The future retail stores will be warehouses.

This will be the key for success. Stores will need to order directly from the manufacturer to keep costs down instead of using a distribution center. Everybody needs to be paid for their time, but if nobody's buying, then nobody's going to get paid. We currently live in a throw-away society, so low prices are going to be the key to success.

 

[Steady Eddie]

The funny thing is Amazon hasn't turned a profit either. It's not as though Sears should be copying their business model, as the article implies.