Sears to close dozens of stores in U.S.

Steve Chiotakis Dec 27, 2011

Steve Chiotakis: On this day after the day after Christmas, a good number of retailers are thanking Santa for what’s turning out to be a pretty good sales year. But Sears and Kmart aren’t feeling so much love. Sales at both chains have been down more than 5 percent
in the latest quarter.

Paul Swinand watches the happenings at Sears for the consulting firm Morningstar. He’s with us now from Chicago. Good morning Paul.

Paul Swinand: Good morning. Thanks for having me.

Chiotakis: You got it. What’s going on at Sears? What’s wrong there?

Swinand: Well, one thing that we’ve seen for the whole year is that appliance sales have been very weak. Sears still has about 30 percent of the appliance market, so they’re suffering from a cyclical decline in housing that just doesn’t seem to end.

At the same time, they’ve been underinvesting in stores, which tends to lose the younger customers. So, you know, they’re in a tough environment in retail, and on top of that their biggest category has an economic headwind.

Chiotakis: So what does a company do to get back on track, do you think?

Swinand: Well that’s the tough part, because their competition — Target, and Walmart, all your other retailers, especially Home Depot and Lowe’s — is maybe not opening stores as quickly as they used to. But they are growing same-store sales, and they are probably attracting some of Sears’ customers.

I think they have to hope for just a cyclical turnaround in the appliance business. They have to spruce up the stores a little. And they’ve done a lot of work — for example, the Kardashian soft goods line — they are working to improve their soft goods business as well. So I think there is the possibility of seeing some light at the end of the tunnel, but they also have to hope that the economy cooperates the next year or two.

Chiotakis: Paul Swinand with Morningstar. Paul, thanks.

Swinand: Thank you.

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