MELISSA BLOCK, host:
The government reported today that retail sales fell six-tenths of a percent last month - a sign that inflation and the credit crunch may be affecting consumer spending. Lots of retailers are already experiencing problems. Among them, one of the oldest, Sears. To bolster its image and its bottom line, the company may soon be trying something new - selling its Sears brand products at other stores.
NPR's Cheryl Corley reports.
CHERYL CORLEY: Sears has been around since the 1800s, that's when Richard Sears started the watch company. Alvah Roebuck would join the business a year later. And by the middle of the 1900s, the mail order business was a conglomerate. It still is, but Sears Holdings - the parent company of Sears and Kmart stores -is no longer number one in the retail world.
Ms. CAROL LEVENSON (Director of Research, Gimme Credit): It's still profitable. Its margins are not what they once were or what they would like it to be, but it makes money.
CORLEY: Carol Levenson is the Director of Research at the corporate bond analyst firm, Gimme Credit. She's been tracking Sears for years.
Ms. LEVENSON: Kind of the headline news about Sears is that the sales continue to be negative, quarter after quarter after quarter.
CORLEY: Like last month, when Sears reported its first quarter net income was 50 percent lower that a year ago. Blind competitors like Target, Lowe's, Wal-Mart and others stores that are luring customers away. Company officials also say the flailing economy really hurts a retailer like Sears where appliances and house wares rule.
Even so, at Sears' flagship store in Chicago on downtown State Street, there is a steady stream of shopper like Lula Simmons(ph) who takes a look at the spring fashions in the store windows and then pass through the revolving doors. Simmons says she likes the store's moderate prices and she and her husband buy…
Ms. LULA SIMMONS (Sears Customer): Mostly appliances or lingerie.
(Soundbite of laughter)
Ms. SIMMONS: They have good-quality things and, like I said, a moderate-price store. So I'm on my way in now to some lingerie.
CORLEY: Anna Linder(ph) and her mother were shopping for a swimsuit. Linder says Sears was the store when she was a kid.
Ms. ANNA LINDER (Sears Customer): I mean that was where we got our clothes. Every back-to-school was - we'd got a Sears to get our clothes. But I don't my kid will ever step into a Sears now.
CORLEY: And Will Anders says that's the problem. A retail analyst with McMillan/Doolittle, Anders says that's because Best Buy and other stores have what Sears has and often at better prices or in hipper surroundings. He describes Sears as pretty good.
Mr. WILL ANDERS (Analyst, McMillan/Doolittle): Pretty good means they've got a good offering, good prices - not the best, good products - not the best. Somebody is better than them in everything. And so pretty good means your second best and second or third best today in retailing is almost a certain disaster.
CORLEY: Edward Lampert, chairman of Sears Holdings, recently compared Sears to the New York Giants who didn't have a great mid-season but won of the Super Bowl anyway. On the Web site, there are commercials that help the company's offense and its defense - the brand names that belong to Sears.
(Soundbite of Sears ad)
Unidentified Woman: Kenmore (unintelligible), the next generation of dishwashers.
CORLEY: In a recent letter to investors, Lampert calls Kenmore, DieHard, Craftsman and Lands' End, some of the company's most important resources. Lampert says since most of those brands are only sold in Sears, access is limited. He says Sears must be prepared to supply its products and services when and where customers want. But that's a double-edged sword. If Sears sells its brand to elsewhere, it may be good news for the products but shoppers may have little reason to travel to Sears stores.
Cheryl Corley, NPR News, Chicago.
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