Is this the last Christmas for Sears?

New York
CNN Business

Tracy Easterling spent about an hour shopping on Sunday at Sears, which was once one of her favorite stores. She was left with nothing to show for it but memories.

Easterling was at Sears in his hometown of Jersey City, New Jersey, one of 15 full-line Sears stores still open. Sears was once the largest and most important retailer in the world.

« It’s the first time I’ve been here in a while, » she said as she browsed the shoe selection, where the shoes were still boxed rather than on display.

“I just came to look for sales. But it’s so empty, and there’s not a lot of choice,” she said. « Back then, you could walk in and get almost anything you needed in one store. »

Easterling said when she told friends she was stopping by Sears, their reactions were, « Is there a Sears open yet? »

« Look at this. It’s as empty as it gets, » she said, looking down the aisles without seeing any other customers, despite shoppers being out in force the weekend after Thanksgiving.

Most of the few shoppers at the Jersey City store on Sunday were older and, like Easterling, remembered Sears in its heyday.

Many quickly left without finding what they were looking for. A few of the younger shoppers said they stopped by only because they remembered coming as kids.

« I used to shop here years ago with my great-grandmother, » said Razeyah Surrell, 23, who picked up pants while shopping with her friend Taryn Reczkowski, 22 years old. They left quickly after Surrell couldn’t find what he was looking for.

« I walked in and said, ‘Wow, that’s sad,' » Reczkowski said.

It was a slow, silent death for an iconic chain, whose groundbreaking catalog and anchor position in many malls nationwide once made Sears the Amazon (AMZN) and Walmart of its day.

When Sears and Kmart merged in 2005, the two together had 3,500 US stores and more than 300,000 employees. But both brands were already on a downward spiral. After the merger, the company focused on selling off its more attractive real estate and buying back shares in an effort to support its share price decline, rather than investing in store upgrades for the make it competitive.

In 2018, the company filed for bankruptcy. Eddie Lampert, the hedge fund operator who engineered Kmart’s disastrous merger and served as the holding company’s CEO, bought the remains of the company from bankruptcy in early 2019. He promised to turn the tide after paying off much of its debt. , unprofitable stores and less attractive leases.

The company that emerged from bankruptcy in early 2019 – with the overly optimistic name Transformco – had 223 Sears stores and 202 Kmart stores nationwide. But less than four years later, he’s barely on life support, as evidenced by the tiny physical footprint and lack of buyers.

Now experts say there’s hardly any reason to keep even the handful of stores he still has open.

“Sears has been derelict for a very long time. There’s no way it’s going to be revitalized,” said Neil Saunders, managing director of GlobalData Retail. open. You can’t make the economy work with that volume of stores.

As to why Sears hasn’t pulled the plug yet, Saunders said: « There may be some contracts or agreements where there’s a penalty if he closes all the stores. Or maybe they’re open because Eddie Lampert has a very strange view of business. He always seems to cling to this illusion that he can bring her back. This could largely be a matter of ego.

Although the company’s demise now seems inevitable, it didn’t have to be, insists Mark Cohen, director of retail studies at Columbia University and former CEO of the unit. company of Sears before the Kmart merger.

He said Sears’ experience in operating its catalog, which featured a comprehensive product list, positions it better than other traditional retailers to jump into online sales quickly. And he said Sears had better rental deals than competing department store chains.

“It could have been an Amazon rival. It was the Amazon of its day,” Cohen said. wouldn’t have been the albatross they were for other department store chains. Nothing would have prevented him from having a second life as a world beater. Ultimately, it was the incompetence and malfeasance of its leaders. »

If – or perhaps when – Sears closes its last store, it will join a long list of retailers, including RadioShack, Payless Shoes, Gymboree and American Apparel, that emerged from bankruptcy only to close shortly.

It is difficult to get an accurate count of the remaining open stores in the business. The total of 15 Sears outlets remaining is down about a third from 23 at the same time last year. But those numbers come from what’s listed in the store locator on the company’s website. Spokespersons for Sears, Transformco and Lampert’s hedge fund did not respond to questions about the number of stores remaining, the company’s profitability or its plans for the future.

The Sears name could survive even if the last full-line stores close.

After emerging from bankruptcy, Transformco purchased the holding company it had previously created, which includes a chain of franchise-owned stores operating as Sears Hometown. The stores are a fraction of the size of the full Sears line and focus on selling appliances, tools and outdoor equipment.

There were around 700 of these stores just before Transformco bought Sears Hometown in 2019, but they also close regularly. Around 100 stores closed earlier this year, leaving just over 100 open today.

Kmart has shrunk to an even smaller size.

A year ago, there were only six Kmart stores in the continental United States and six more in Puerto Rico, Guam and the US Virgin Islands. Since then, the Puerto Rico store has closed and there are only three stores left on the mainland, one in Florida, one in New Jersey and one in Long Island, New York, according to Dick Barta, a former Kmart employee who has closely tracked store closures over the past few years. years. The Kmart website backs up these numbers.

The holiday shopping season is off to a good start, and that might help Sears breathe a little longer. But if the U.S. economy tips into recession as many economists fear, that could be the straw that leads to its demise, said Katie Thomas, director of the Kearney Consumer Institute, an internal think tank at the cabinet. Kearney Council.

« It’s hard to make the case that consumers will go to these stores if they cut back on spending, » she said. « I think that [a recession] could be the final nail in the coffin.

As for when Sears might finally close the last remaining stores, Cohen said it really doesn’t matter at this point.

« The time of death was 2005, » he said, referring to the year Lampert took over the company.

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