Sears analysis
Linh Truong
BA 3103-003
Professor Alex Stein
The Plan to Rescue Sears
Background summary: Sears is one of the largest retail stores in the US and has a wide range of subsidiaries. It established major national brands, such as Kenmore, Craftsman, Lands End, and DieHard which are all highly valued. After it merged with Kmart in 2005, the company began renovating some Kmart stores and converting them to the Sears format. Its current products are diverse, including household hardware, home appliances, electronics, clothing, office supplies, etc. Sears, like the other retail stores like Best Buy, Circuit, etc., has been struggling to compete with Walmart and Amazon. Sears’ revenue continually dropped and net loss increased over time, compelling it to close almost another 120 stores. Consequently, its share price slumped to $31.78. Sears’ leadership blamed it on the bad market environment. Sears’ CEO, Mr. Lou D’Ambrosio, planned to combine both technical upgrades and store renovation. Technical upgrades allow Sears to gather more information about customers ' buying patterns and product preferences. The CEO spent several hundred million to remodel the stores to attract the consumers, because he thought “people always want a place where they could touch and feel merchandise.” 1 In addition, Sears applied a loyalty-reward-program that entices customers to purchase by using points from previous purchasing. Problem statement: Sears had six straight years of revenue decline and recognized a net loss of $3.1 billion last year, driving its shareholder’s frustration. Sears announcement of 120 stores closing caused its share price to plunge. Sears must find a way to fix its business, preventing it from selling its product for scrap value.
Alternative solution: Sears should consolidate its product lines and make its stores become more specialized. Sears has many stores selling similar products, such as Sears Department Store (SDS), Orchard Supply Hardware (OSH),
BA 3103-003
Professor Alex Stein
The Plan to Rescue Sears
Background summary: Sears is one of the largest retail stores in the US and has a wide range of subsidiaries. It established major national brands, such as Kenmore, Craftsman, Lands End, and DieHard which are all highly valued. After it merged with Kmart in 2005, the company began renovating some Kmart stores and converting them to the Sears format. Its current products are diverse, including household hardware, home appliances, electronics, clothing, office supplies, etc. Sears, like the other retail stores like Best Buy, Circuit, etc., has been struggling to compete with Walmart and Amazon. Sears’ revenue continually dropped and net loss increased over time, compelling it to close almost another 120 stores. Consequently, its share price slumped to $31.78. Sears’ leadership blamed it on the bad market environment. Sears’ CEO, Mr. Lou D’Ambrosio, planned to combine both technical upgrades and store renovation. Technical upgrades allow Sears to gather more information about customers ' buying patterns and product preferences. The CEO spent several hundred million to remodel the stores to attract the consumers, because he thought “people always want a place where they could touch and feel merchandise.” 1 In addition, Sears applied a loyalty-reward-program that entices customers to purchase by using points from previous purchasing. Problem statement: Sears had six straight years of revenue decline and recognized a net loss of $3.1 billion last year, driving its shareholder’s frustration. Sears announcement of 120 stores closing caused its share price to plunge. Sears must find a way to fix its business, preventing it from selling its product for scrap value.
Alternative solution: Sears should consolidate its product lines and make its stores become more specialized. Sears has many stores selling similar products, such as Sears Department Store (SDS), Orchard Supply Hardware (OSH),
Cited: Bustillo M. (2012, March 12). Plan to Rescue Sears. Retrieve from http://online.wsj.com/article/SB10001424052702303717304577275632246292326.html 1 http://www.forbes.com/sites/tomgroenfeldt/2012/05/02/sears-competes-on-big-data-and-loyalty-programs/ 4 http://www.forbes.com/sites/davidvinjamuri/2012/01/10/can-sears-be-saved-four-strategies-for-success/ http://www.brandingstrategyinsider.com/2012/01/the-future-of-the-sears-brand-lies-in-reinvention.html#.UTqVa1c5iUE 3 time change Sears did not “Expect More. Pay Less.” Operational efficiency improvements are a necessary part of business, but they alone will not drive growth. averaged retail sales of $148 per square foot-year across Sears outlets, and $118 per square foot-year across Kmart outlets. from $303 in 2002 to $291 last year. http://seattletimes.com/html/businesstechnology/2017147189_sears03.html San Francisco. (2012, May 12). Valuing Facebook Zuckerberg’s rocket, ready for lift-off. Retrieved from http://www.economist.com/node/21554532 1 5 Stock Market Metrics Explained. (n.d). (2012, March 8) retrieved from http://www.investopedia.com/financial-edge/0312/5-stock-market-metrics-explained.aspx#axzz2Lf9Usa1c 4