Sears, Roebuck and Company, once the leading retails of general merchandize, clothing and tools may not be long for this world according to a recent Fortune Magazine report.
In fact, give the years of declining sales, the company indicated there is “substantial doubt related to the Company’s ability to continue as a going concern.” In other words, the company has lost close to $10 billion in the last six years with their stock declining 9.3%.
Who is Sears, Roebuck and Company?
This is devastating news for a company which was established in 1886 when Richard Sears started the R.W. Sears Watch Company in Minneapolis, Minnesota. His goal was to sell watches by money order. The business was soon sold, but Sears united with Roebuck a few years later to start Sears, Roebuck and Company.
The company’s popularity sky-rocketed over the next few years by establishing a catalog and selling low cost products to those who had limited access to retail stores. By 1925, however, the increase in the availability of the automobile customers now had the means to travel to larger cities to shop. With this growing trend, Sears opened their first retail store in Chicago, Illinois.
For the next 60 years Sears remained the nation’s largest retail store until it was surpassed by Kmart Corporation and then finally Wal-Mart.
What lead to the destruction of Sears?
There are so many economic, financial and technological changes which lead to the destruction of this retail giant. It’s hard to pinpoint one exact cause. For example, Sears failed to exploit the growing trend of on-line shopping in the same way Amazon did. They failed to make their stores relevant and exciting to young adults. They also failed to differentiate themselves or establish key marketing strategies.
Forbes Magazine, however, pointed the finger directly at the some of the top management which the magazine claims micromanaged management, employees, and mid-level managers. The magazine also claims that management was always reacting rather than proactively responding to trends. Finally, when Sears had the chance to sell some of their valuable assets such as DieHard batteries, Craftsman tools, and Land’s End apparel they failed to capitalize and lost some potential revenue.
What does the future hold for Sears?
So what does the future hold for this iconic store? No one knows for sure, but there are a lot of opinions about where the blame should be placed. In fact, some financial experts claim most of the blame should be focused on CEO Edward Scott Lambert who has been CEO since 2013 and who is called by some as the “second worst CEO in history.” He has been at the helm as Sears fell from an $11 billion valuation and a $92/share stock price to a $1.6 billion valuation and a $15/share stock price today. A loss of a whopping $9.4 billion dollars!
What does CEO Lambert say about Sear’s future?
Lambert seems optimistic that the company can survive. In an open letter to employees last month he said the company had what it takes to move forward. “We are in a financial position to continue to fund our operating needs and meet our financial obligations.”
Unfortunately, Lambert has been saying this for years as debt has increased and sales have declined. Unfortunately, employees are set to lose a lot more than just their jobs if Sears fails.
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