Bad news for Sears Holdings — the parent company of Sears and Kmart lost $56 million in the first quarter, and some experts are saying that boss Eddie Lampert may have to face up to the fact that Kmart needs to close.
From the AP:
Howard Davidowitz, chairman of retail consulting firm Davidowitz & Associates, said he thinks Lampert will need to dramatically realign business units — and even consider shutting down the discount Kmart brand — if the retailer has any hope of remaining viable to the American consumer.
“It’s going to get a lot worse,” he said. “Given these results, I think Lampert really has to now face up to major, major store closings.”
Sears is in the midst of a high-stakes restructuring aimed at reconnecting with customers and reinvigorating atrophied same-store sales, which have fallen for the past nine consecutive quarters. The company is also searching for a new CEO.
The company said its troubles were due to the soaring cost of gas and food leaving less money for would-be customers to spend at Sears and Kmart. It seems that these customers are also defecting to warehouse stores and buying in bulk: Costco isn’t having any problems — their profits are up 32%.
Sears Holdings swings to 1Q loss on slumping sales [AP]
(Photo: Joseph Hoetzl )
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we loose and what will happen to the prices at WallyWorld?
No competition or less competition always equals higher prices.
My wallet votes for Kmart to say around a bit longer.
@Corporate-Shill:
SearsMart
Sell the real estate while it’s still worth something. Lampert has pissed away 99% of the brand value and pissed off all of the life long customers, so the stores are worthless.
Back in the 80s Kmart was a dump and it still is. Sears has the brand recognition with Craftsman but they need to sell it off to a more successful corporation to keep the name alive. You can already buy tools with the same guarantee/warranty from Lowes for much less money.
1) replace pretty much everything you sell
2) replace pretty much everybody that works there
3) replace your entire executive team
yeah…that should be easy.
the sad part is the brands that suffer under this weight. kenmore makes great appliances (imho) & craftsman are some of the best tools out there (at least for hand tools). & sears…well, they’ve been around for over 100 years.
if they did those 3 things, i honestly think they could thrive.
@DeeJayQueue: Good point. K-Mart’s biggest fault was not moving out of bad locations fast enough. At least Wal-Mart did that. Left a slew of stores in their wake. You know where K-Mart could clean up at, brick and mortar wise? Investing in small stores that could service small communities. Lots of places had Wal-Marts move away because they wanted a bigger store 45 minutes away. In the end they were left with nothing in the town. These towns would be big enough to keep a small discounter in operation. People do pay for convenience.
@DeafLEGO: If I remember wasn’t it K-Mart that bought Sears? Or was it just the ordering in which Lampert bought those? As to Lands’ End, does anyone know how that buy out was originally structured? It felt to me it was a hands-off deal kinda like McDonald’s buying into Chipotle. Or am I wrong on this? I’ve always worried about Lands’ End since Sears got into the picture.
Kind of sad in a nostalgic kind of way. We shopped at KMart when I was a kid all the time, though that was mid to late 70′s. Of course that was before we had Walmart, although we did have Target (in Arizona). I remember getting their Icee’s. I was in a KMart about 7 years ago and it was time to go out of business then.
You know, we said goodbye to both Caldor and Montgomery Ward. There is no reason not to say goodbye to K-Mart as well.
I have to agree with the geography thing. Ours is in town anchoring a plaza full of big lots and tax services. There’s just no reason to be in that part of town. Wal-mart, on the other hand, is right at a big intersection where lots of people live and work. It just makes sense.
And I don’t think it was image or store quality- look how well wal-mart does with a miserable shopping experience and an even worse image. Most people would put up with even worse if the price was lower.
Right place, right price. Kmart has neither.
I never saw how the Kmart thing ever made any sense. Sears was a store that had most everything, and should be able to hold their own against JC Penny. (should). But Kmart was adrift, not as low priced as WalMart, tackier than Target, they were edged out of the market.
So if Sears loses Kmart, and gets some people to help them really compete against Penny’s and Target, they should do OK.
should.
Kmart has been gone from San Antonio for some 6-8 years. I was much amused this past weekend to actually see one in Monterrey Mexico. I grew up poor and wearing Goodwill and Kmart. Kmart was the place to run around and “window shop.”
The Sears -KMart partnership worked out so well for them, that now if we could just get them to buy Macy’s maybe they could put a nail in that coffin, too.
Maybe Kmart should sell off those antique merry go rounds they have out front – raise a little money. Any Kmart I’ve been to in the last 20 years looks like it’s been looted.
Kmart died for me when their selection fell apart. When I lived in a smaller town where they were the only thing going, the store was pretty nice and you could find pretty much whatever you needed. Now I live in a bigger place, with 3 Wallys, 2 Targets, 3 Meijers and 3 K’s, and the K’s have actually been pretty much looted (shoplifting is rampant) of the small amount of merchandise they still carry. Toy selection sucks, electronics selection sucks, it all sucks. The only thing going for the Sears here is the portrait studio. Too bad it doesn’t belong to them.
Cramer was absolutely correct as to the valuation of Sears Holdings two years ago. The properties, by themselves, justified higher share prices. Cramer said again and again that if the stores could just eke out any profits, it would just be icing on the cake.
Now,however,with the real estate collapse, the company is in big trouble.
Sayanara, K-Mart. So long, Sears.
Everyone here has said what needs to be said. KMart & Sears are past their prime, Sears needs an overhaul, KMart’s a lost cause.
And yes, Sears is the best place to park at the mall.
I also want to point out that Wal-Mart has closed several stores in the area when the stores became too disgusting and too small, then built new super stores in better areas. And this is Wal-Mart for crying out loud! They’re usually the most grimy, filthiest stores in the area.
My dad bought a Craftsman weedeater at Sears last week, took it home and it wouldn’t stay running so he went right back to the store where they had to hear it run first and then gave him a new one that he took home and it wouldn’t stay running either. By that time the store was closed (the one in our town closes at 6) so the next day he returned it for his $$ back and went to Tractor Supply and bought a Stihl brand from there. I told him not to buy a Craftsman!
Sears and Kmart need to either improve their customer service and merchandise quality or go bankrupt. Personally, I don’t care which because I no longer shop at either place, their prices are too high, customer service sucks, and quality of merchandise is poor.
Good works guys, you just might beat Blockbuster, Circuit City or JC Penny to bankruptcy yet.
@mac-phisto: the sad part is the brands that suffer under this weight. kenmore makes great appliances (imho) & craftsman are some of the best tools out there (at least for hand tools). & sears…well, they’ve been around for over 100 years.
Well, Sears never made anything. Kenmore and Craftsman are both made by other companies and I’m sure the names will be sold off.
Sears is good for nostalgia. K-Mart is just sad.
@highmodulus: Good works guys, you just might beat Blockbuster, Circuit City or JC Penny to bankruptcy yet.
See, I hope JC Penny can turn around. Seems they are the only place that sells stuff that fits me or at least did before I lost 25 lbs. I should probably shop around more.
@TacoDave: On the contrary, I wish old-school department stores would come back in force. Sears is a pale imitation of an old-school department store. Boscov’s, a Pennsylvania chain, is one company that does the old-school department store thing right. It can be done, and it SHOULD be done–I think we’re heading into a long period of centralization, with high fuel prices reversing the decades-long process of decentralization. True department stores are one way to bring that about.
It would be sad if Kmart closed. I remember shopping there as a kid but, like others said, they just haven’t maintained their stores. In the town I live in, most of the shopping is being built on one end of town, near the Super Wal-mart and Target, but Kmart is the only similar store on the other end of town. They are near income based housing and apartments for the elderly. Many of these people can’t easily make it to the other side of town. It would be nice if Kmart fixed themselves up and actually looked nice to shop at. The shopping center they are in is being completely tore down, except for them, and being remodeled. I had hopes that Kmart would do the same. Sometimes I can find things there I can’t find other places but since it’s such a dingy, worn out, out-dated store, I just don’t go in there that often. It sounds like many people have the same reason for not shopping there.
it doesn’t help that their website’s javascript is broken and 95% of the time you can’t really checkout your cart. oh and things that display “in stock” are actually not. pretty annoying experience. their online store is keeping in sync with their physical stores.
There are two Sears stores within 30 minutes of me to the north or east, and both are the exact same. The merchandise is of a dubious quality, of limited selection, usually hailing from the early 90′s, and what there is to choose from is sparse. There are roughly 8 people working in the entire store at any given time, and 5 of them are usually on their break – but that’s okay, because whenever I’m walking through it, there’s about 4 customers shopping. How these two stores have remained open for the last few years confuses me. They’ve been this awful for years.
Its funny but in the real world(tm) we do not expect an auto mechanic to be able to write software. So why do we expect a Hedge-Fund manager to run a retail business ?
Oh wait, that’s right! ANY high level executive is able to run ANY business! How many times has this been proven wrong again and again? Hmmm, Home Depot comes to mind.
What arrogance. Eddie Lampert suffers from too much ego. His empire is crumbling all around him but it is high food & gas prices that is causing his troubles; not his complete lack of leadership skills in retail management.
Of course, when the ship finally sinks, he will likely still get his golden parachute and be able to wheedle his way onto another CEO position just like Nardelli did.
Maybe it’s my low expectations for retail experiences in general, but I’ve bought appliances for two houses over the past ten years at various places including Lowe’s, Home Depot, and Sears. Sears won on price, installation quality, and service hands down through all my experiences, though Lowe’s and HD had better selection on certain items.
@Front_Towards_Enemy: Thank you, thank you. I had to sound like a curmudgeon, but what happened to the idea that a person worked his way up through the ranks–beginning on the sales floor and progressing into management? Now, some jackass thinks he can walk into ANY business with an MBA in hand and know what to do. Cranking out spreadsheets doesn’t tell you anything about the actual business you’re trying to run.
@battra92: JcPenney could end up next in line if they don’t get a clue. While Penneys is still far far better than Sears, the quality of the clothes is unreliable. We have bought a number of clothing items only to have seams come undone, holes show up in knit weaves or shirt that lose their shape after proper washing. They are really hit or miss. Since they are more expensive that places like Target you expect a bit more reliability. While our Penneys store is far better in all aspects than Sears they have been overcrowding the store with merchandise, areas like shoes are always a mess and the store has not been remodeled since the early 90′s and it is starting to show.
Macy’s every day bargain brands are starting to beat out Penneys.
Anyone remember Jamesway? Everyone talks about growing up and going to Kmart, I remember Jamesway here in Upstate NY.
I see a doomcloud, and feel deja vu….
P.S.- Our Sears isn’t all that bad in our mall. It’s big, clean, lots of sales reps, prices are “decent”. But they also have to compete with Target, JcPenney, and Kauffman’s.
EPIC FAIL! We totally called it when the merged, that two wrongs don’t make a right.
After the recession, I can only see very upscale and very downscale retailers surviving. After all, they should be mirroring the widening wealth gap. Or at least the perception of one, where upscale shoppers refuse to shop at something even resembling downscale. If I were sears/kmart, I’d start going much cheaper to compete with Walmart and the family dollar.
When was the last time any of us actually shopped at Kmart? I think my last time was about 2 years ago, and as much as I hate Walmart, I live in the country and thats all there is so its slim pickings out here.
Hm! I was thinking of picking up a Craftsman drill and I’ve been putting it off. Now I’ll be watching like a hawk to see if we get any “going out of business” sales.
The Kmart brand name is so tainted that they would need a buyout, new name, remodel and then maybe three or four more buyouts with new names and remodels just to free of the taint.
@verucalise: Ahhh, Jamesway. Jamesway started to get the smell near the end. After it went belly-up, a few Jamesway locations I knew were taken over by Ames. Ames got the smell, too. Soon after, it was gone.
I walked into our new Sears Grand last night looking to drop around $450 on several items – on a Sears card no less.
As usual the employees far outnumbered the shoppers. I went right to the area where the main item of interest was and stood there. And stood there. Walked around, came back, stood there.
In that process of about 20 minutes I probably saw 8-10 different employees going in other directions. 3 employees actually told me someone would be with me shortly as they quickly passed right by me. So… I walked out – as I usually seem to do – frustrated and empty handed.
Sears had great customer service once. But that was a long time ago. I cannot see how they will even stay in business thru the end of the year at their current rate of miserable service.
I’ve only been to K-Mart twice in the last couple of years. And, each time I left the store, I felt like I needed to run home and take a shower. K-Mart stores are disgusting. Unless they make substantial improvements in the shopping experience (e.g. atmosphere, lighting, cleanliness, organization), I will only go back after Target, then Walmart are out of stock of something I need and can’t wait for.
@revmatty: Right after Kmart took over Sears, they had one of those buy out plans to oust senior executives and to save money. Anyone who didn’t take it was pressured out later. They lost a lot of corporate history in doing that. People who could’ve stood up and said something was a bad idea wasn’t there anymore. Case in point: Executives living in northern climates thought it would be a good idea to have ALL of the stores turn off their A/C at night during the summer. “Think of the savings,” I bet they were saying. None of these guys had any Southern experience. Those poor A/C units would work all day to bring the humidity levels down in their stores only to be turned off again at night. Cost savings would have been negligible. Never heard how that ‘experiment’ turned out for them. My insider friend took a buy out package shortly after that decision was made and was much happier for it.
It’s all too little, too late IMO. Target and Walmart are totally aggressive, and as previous posters have said, are building in desirable locations right next to nice, new shopping centers. Hell, I just had a SuperWalmart open up by me and there’s a fairly new Target right across from that.
Sears/Kmart should have immediately moved to build new locations and abandon the old ones. You even see JCPenney building standalone stores out here to compete with Kohl’s. At least I give them an A for effort.
The last time I shopped at K-Mart was a going out of business sale where I bought a Gamecube that they were selling at 40% off to clear out the inventory. And this was back when the Cube had only been out less than a year.
As a former Sears employee, none of the comments here surprise me. The reason there is a skeleton crew on hand at most Sears stores is because they are scheduled for less than 15 hours a week because they aren’t making much if any money. My very good friend gave her notice this week as they cut her hours from right under 35 to less than 10. Sears is in a downward spiral. The last time I bought anything from them was when I bought my PS3 in January. And the absolute ONLY reason I got it there was because they never turned off my discount card so I got it cheaper than retail.
Sears and K-Mart is a dying breed. I can recall sitting in on sales meetings when I was there, and the leadership was a joke. Many is the time I would “Okay, guys! The key to better customer service is our dress code. Some of you haven’t been wearing your white and black dress clothes and the customers are picking up o it.” A week later, that guy is gone and the new manager (an endlessly irritating woman) comes in with “You know that 24 hr. delivery guarantee sign we have out front? Here’s how you talk the customer out of it! We only do that in emergencies, make sure the customer realizes that.”
It was at points like this I knew my former workplace was going to die, and I had to escape the ship which I did.
Here in Memphis,TN.. all the K Marts are closed. And we don’t miss them… I say bring back Jamesway! lol…
the stores should be torn down and the spaces they consume converted to fields of sunflowers.
that would serve the communities they are in more than the crap that’s there now.
Just like a lot of other people, I remember shopping at K-Mart as a kid with my mom. K-Mart was the only place to shop in the town we lived in. Seriously. You either shopped at K-Mart or Walgreens or you didn’t shop. There was a “nice” K-Mart by my house and a “dirty” K-Mart across town. My favorite part about going to K-Mart as a child was the Little Caeser’s Pizza at the back of the store. It was almost a treat to make it all the way through to the back of the store and get to smell that cheesy goodness! The “nice” K-Mart closed back in 2002 or 2003 when K-Mart filed for bankruptcy. The “dirty” K-Mart is still open and serves 3 customers a day.
Fast forward a few years (and a move to the Chicago suburbs) and now I have 2 Wal-Marts, a Super Wal-Mart, a Super Target, a Target, a Meijer, and a K-Mart by my house just for my shopping pleasure. My usual store is almost always Super Target, but now that we have a Super Wal-Mart, I find myself shopping there more and more for groceries and everyday items. The new Super Wal-Mart is in an up-and-coming area surrounded by new condos and businesses and definitely has a mix of rich and poor shoppers.
But, getting back to business, I decided to go into the K-Mart a few months ago just to see how it was. I have to say, it wasn’t bad, but there just wasn’t anything to make me want to shop there over Super Target or Super Wal-Mart. I feel as if K-Mart is frozen in time. When I stepped through those doors, it was 1989 again in my mind!
If K-Mart wants to survive, they need to choose where they are going as a company. It’s as simple as that. They need to figure out who they are trying to target.
To make an example of this, look at Land Rover. They don’t seem to be suffering, even in our supposed “recession,” because the super rich will always have money to spend on things that show (the poor and the not as rich) they are rich. Similarly, Aldi stores aren’t suffering because the poor will always need to find a way to save money even on basics like groceries.
If K-Mart would move to one end of the spectrum or the other, consumers would know WHY they should shop there. Like another poster said, maybe K-Mart should try to go upscale. There are a lot of affluent older people who used to shop at K-Mart back in the 80s when they were younger (with kids) who would probably come flocking back (from Target and even Wal-Mart) if K-Mart were to choose that end of the spectrum. Same goes if K-Mart decided to go down a more “discount store that’s nicer than Dollar General” route. People almost always want to feel like they are getting something for nothing. There is a segment of the population who shop at Dollar General simply because of the prices, but would love to shop at a store like Target if they could afford it. There you go K-Mart. There’s a niche for you!
So, here’s my message to K-Mart: You are not the only game in town anymore, so stop pretending like your outdated and sometimes less-than-favorable stores will skimp by based on the reputation you built 20 years ago. It just doesn’t fly anymore. Consumers are (rightfully) smart these days. If you try to sell them 2 apples for $1, they will look to see where they can Buy 2 and get 1 for free.
Sway me K-Mart. I’m an easily swayed consumer. Refresh your stores, including products, prices and employees, and I may just come back. And so might a lot of other consumers. Don’t give up without even trying.
By the way, this is my first post on The Consumerist! I’m a long time lurker, and this post just made me want to leave a comment.
@B: I remember a mall I used to go to as a kid was anchored by a Jamesway. When Jamesway went out of business the mall sunk faster than the Titanic. They don’t call them anchors for nothing. If the large stores go away, the rest will crumble like a house of cards. Checkmate.
@bohemian: Anyway, I worked at Kmart for 4 years. From 2003 to last year. In about 2005 the refurbishment happened. They totally redid the whole store from end to end… but as you said, they didn’t do a thing with the old tiles on the floor and ceiling. Fixtures were changed but the rest was just shifted. They dropped the One Hour Photo section (After spending a year pushing it like hell.) completely. Though I guess it’s fine anyway since film is dying anyway.
It’s a flagship store in Doylestown, PA. One of the very first to go through the transition. Unfortunately the transition just made the company worse. Half-assed transition is all it was. Shifting things around with new fixtures isn’t the same as actually ripping eeverything out and starting anew. Apparently every transitioned store got 1 million bucks to use for it. Doesn’t look like a million bucks to me. They kept all the old fixtures like shelves and tried to just paint them thinking that would cover up the rust and dings.
They screwed me over anyway. I was originally in electronics. I know electronics. But over time they preferred to put me on the registers. And when someone needed help in electronics they took someone who didn’t know a thing to help. I had to get out of there. Should have left years before.
All my friends still work there, except my best friend who left for CVS. I still go in every week. The managers love me. And even though I don’t work there anymore I feel at home. But I hate to say it, in a really twisted way, I wish the company would just fold.
Sears should just absorb Kmart back into itself, close half the stores, create one single brand and try to salvage themselves. I got a job down the row from my old Kmart job so I can “Watch it collapse under its own weight” from the outside. Rather than the inside this time.
Every K-Mart I’ve ever been to was filthy, disorganized, and in disrepair. Repainting the counters is not enough. Sears is a little better aesthetically (all their lights are usually working, at least) but still feels old and half-abandoned. They’re in decent locations around here, too. It baffles me how they don’t seem to realize an unpleasant atmosphere drives customers AWAY.
I feel poor when I walk into a Kmart. I feel like a wise bargain hunter when I walk into a Walmart.
I shop at Kmart about once a week. They have pretty good bargains and selection. I like Target more, but K-Mart has a sort of nostalgia. K-Mart also has good private-labels like Route 66, Jaclyn Smith (clothing and housewares), and American Fare (Groceries, OTCs etc.).