The Biggest Thing on Sale at Sears? Pieces of Sears
Is Sears (SHLD) selling itself off, bit by bit? It sure looks that way.
The retailer's plan, announced this week, to divest itself of more than 1,000 Hometown and Outlet stores marks its latest move to slice off chunks of its ailing business.
Eddie Lampert, the hedge fund guru who leads Sears and is its majority shareholder, has been selling off the chain's assets over the past seven years. He's done so instead of investing in reviving its 810 full-line department stores, critics say.
Sears' plan to spin-off 1,238 Hometown, Outlet and hardware stores into a separate, publicly-traded company follows its spin-off of its Orchard Supply Hardware chain (OSH) on Dec 30, 2011.
Meanwhile, Sears announced in May that it will sell of nearly half of Sears Canada.
And, looking ahead, the retailer is also reportedly mulling the sale of Lands' End, the popular catalog/e-commerce retailer it purchased in 2002.
"Everything at Sears is for sale," Mark Cohen, professor of marketing in the retailing studies department of Columbia University's business school, and former CEO of Sears Canada and Bradlees, tells DailyFinance.
"Lampert sells off whatever he can find a buyer for," he says. "Even if everything he does is for the benefit of shareholders, since he's the major shareholder, it's for the benefit of Eddie Lampert."
But while the chairman has been busy pruning Sears of what he's deemed non-core businesses, he's given consumers few new reasons to shop at the department store.
Sears has been on a downward trajectory ever since Lampert orchestrated its merger with Kmart in 2005, posting steady sales declines.
In turn, "The customers' affection diminishes, the financial success of the business dissipates, and [as] it's not refreshed and renewed, customers have stopped shopping at Sears for core products," Cohen says.
Indeed, in a modern retail landscape dominated by mid-market players such as Macy's (M) and Kohl's (KSS), and discounters like bargain behemoth Walmart (WMT) and trendy Target (TGT), Sears has failed to carve out a niche for itself.
While Sears still owns Kenmore appliances, Craftsman tools and DieHard batteries -- arguably its most valuable assets these days -- even those properties are looking iffy as customer draws: Lampert has been pushing to have the brands sold at other retailers through licensing agreements.
Sears started selling its Craftsman hand and power tools through Costco (COST) last month, while DieHard batteries are carried at a number of other retailers, including competitor Home Depot (HD) -- which risks diluting what's left of its brand equity.
What else will Lampert deem expendable? And what will be left of the chain in five years? Stay tuned.