Financial Woes Place Future Of Sears In Doubt
AUDIE CORNISH, HOST:
Shoes, watches, bicycles, ovens - you could once order all of those things from Sears. The company was a pioneer of the mail-order catalog. And for years, its department stores were a mainstay of American shopping malls.
(SOUNDBITE OF ARCHIVED RECORDING)
UNIDENTIFIED CHOIR: (Singing) Come on in and shop.
UNIDENTIFIED SINGER: (Singing) It's so hard to stop.
UNIDENTIFIED CHOIR: (Singing) There's more for your life at Sears.
CORNISH: Now the CEO of Sears Holdings says he has serious doubt the company will survive. The news came in an annual report released Tuesday. Earlier I reached out to Hayley Peterson. She writes about Sears and Kmart, which Sears owns, for Business Insider. She says for anyone who's followed the company, this news is no surprise.
HAYLEY PETERSON: The company's been struggling for many years now. It's been closing tons of stores. Just in the last five years, it's lost about 40 percent of its sales. So business has been tanking for a while, and Sears has been trying hard to turn business around. But we haven't really seen any signs that they're having success with that.
CORNISH: What are the other ways they're trying to stay afloat?
PETERSON: They're investing a lot in a rewards program called Shop Your Way. And this is also tied to their e-commerce site. And they're investing a lot less in stores, and as a result, stores have been languishing. Shoppers complain that when they walk in the stores, they can't even find a cashier to check them out, and that's a big problem.
CORNISH: Now, these dire comments on the company's outlook came specifically from Sears CEO Eddie Lampert. Who is this guy?
PETERSON: Eddie Lampert came from a hedge fund background before he took the helm at Sears and Kmart and merged the two about a decade ago. He really had no retail experience before coming to Sears and Kmart, and he has been described as a visionary and someone who is a genius at crunching numbers. But he's also been accused of having no experience in the business of retailing and being out of touch with reality in that sense.
Also, I spoke to a lot of corporate employees, employees who worked very high up in the company and worked with Eddie Lampert on a regular basis. And they spoke about a very difficult work environment. There was sort of a culture of fear that was fostered in conference rooms there. I've been told that in the corporate office, everyone's filling out their LinkedIn profiles and looking for other places to work because there's a lot of distrust in his method of management at this point.
CORNISH: Is this really about Sears, or is this about big-box retailers in general - right? - and kind of the struggle against online business and just the whole business model?
PETERSON: There are all kinds of external factors that are pressuring department stores right now. I mean you hear from Macy's and J.C. Penney - they're also closing hundreds of stores. So Sears is falling victim to those pressures as well. But Sears is doing arguably worse than any other major department store at this point. And that's because they have gone so many years without reinvesting in stores. And a lot of customers have just lost faith in the brand, and they won't return to the stores anymore.
CORNISH: So what does that lack of reinvestment look like when you, you know, walk the floors of a Kmart or a Sears?
PETERSON: So I've been to a Sears and a Kmart store within the last couple weeks, and both seemed like ghost towns to me. There were no other customers in the stores. I remember on the second floor of one of the Sears stores that I went to, about half the floor seemed to be completely empty. It looks like there's not a lot of inventory to fill the shelves. And when you look around, you don't see any employees or shoppers.
CORNISH: What are you hearing from customers? I mean is there a sense that something could be lost with Sears or people who, you know, once shopped from the Sears catalog?
PETERSON: Customers are highly nostalgic about the Sears brand. So many people remember flipping through that catalog around Christmas, circling what they wanted for the holidays in terms of gifts. And they remember growing up, and it was an aspirational brand. It was the only store that their parents shopped. And so a lot of people really hate to see the brand languishing.
CORNISH: That's Hayley Peterson. She's a senior correspondent for Business Insider. Hayley, thanks for talking with us.
PETERSON: Thank you.
[POST-BROADCAST CORRECTION: In this story, we state that the CEO of Sears Holdings said he has serious doubts the company will survive. While we note that this assessment came from the company in its annual report, we incorrectly attribute the statement to the CEO. We should also note that the annual report detailed steps the company is taking to mitigate the risks.]
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Correction March 27, 2017
In this story, we state that the CEO of Sears Holdings said he has serious doubts the company will survive. While we note that this assessment came from the company in its annual report, we incorrectly attribute the statement to the CEO. We should also note that the annual report detailed steps the company is taking to mitigate the risks.