What Recovery? Sears and J.C. Penney are DYING

Large_Sears_logo_1994-2004

Jcpimage

http://theeconomiccollapseblog.com/archives/what-recovery-sears-and-j-c-penney-are-dying

Two of the largest retailers in America are steamrolling toward bankruptcy.  Sears and J.C. Penney are both losing hundreds of millions of dollars each quarter, and both of them appear to be caught in the grip of a death spiral from which it will be impossible to escape.  Once upon a time, Sears was actually the largest retailer in the United States, and even today Sears and J.C. Penney are “anchor stores” in malls all over the country.  When I was growing up, my mother would take me to the mall when it was time to go clothes shopping, and there were usually just two options: Sears or J.C. Penney.  When I got older, I actually worked for Sears for a little while.  At the time, nobody would have ever imagined that Sears or J.C. Penney could go out of business someday.  But that is precisely what is happening.  They are both shutting down unprofitable stores and laying off employees in a desperate attempt to avoid bankruptcy, but everyone knows that they are just delaying the inevitable.  These two great retail giants are dying, and they certainly won’t be the last to fall.  This is just the beginning.

The Death Of Sears

Sales have declined at Sears for 27 quarters in a row, and the legendary retailer has been closing hundreds of stores and selling off property in a frantic attempt to turn things around.

Unfortunately for Sears, it is not working.  In fact, Sears has announced that it expects to lose “between $250 million to $360 million” for the quarter that will end on February 1st.

The Death Of J.C. Penney

J.C. Penny has been a dead man walking for a long time.  In some ways, it is in even worse shape than Sears.

If you can believe it, J.C. Penney actually lost 586 million dollars during the second quarter of 2013 alone.

How in the world do you lose 586 million dollars in three months?

Are they paying employees to flush giant piles of cash down the toilets?

This week J.C. Penney announced that it is eliminating 2,000 jobs and closing 33 stores.

Overall, shares of J.C. Penney have fallen by an astounding 84 percentsince February 2012.  And keep in mind that this decline has happened during one of the greatest stock market rallies of all-time.

For now, J.C. Penney will continue to try to desperately raise more cash from investors that are foolish enough to give it to them, but all that is really accomplishing is just delaying the inevitable.

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http://www.reuters.com/article/2014/01/22/us-sears-chicago-idUSBREA0L01420140122

In a blog post on Tuesday, hedge fund manager Edward Lampert, who is Sears’ CEO and top shareholder, said store closings are necessary because shoppers’ habits are changing as they buy more online.

“The consensus about decreased store traffic also highlights another decision that has steered our work: we very often need less space to serve our members better and we may need fewer locations as well,” Lampert said.

“As difficult as these changes are, we believe the alternative of failing to plan for or even see where the retail industry is heading would be far, far worse.”

Sears reported a 9.2 percent decline in comparable sales for the holiday season at its namesake chain, the latest poor showing by the retailer. The company also operates the Kmart discount chain.

Sears Holdings has closed about 300 U.S. stores since 2010. The company has about 2,000 Sears and Kmart locations in the United States.

Other retailers are also closing stores. J.C. Penney Co Inc announced last week that it was closing 33 of its 1,100 stores. Macy’s Inc is closing five stores, although it plans to open eight new locations.

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a few reasons for this but the underlying one is online sales..more lost jobs that will never return..icons come and go..

401

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~ by seeker401 on January 27, 2014.

6 Responses to “What Recovery? Sears and J.C. Penney are DYING”

  1. http://www.salon.com/2013/07/18/ayn_rand_killed_sears_partner/

    http://www.gurufocus.com/news/226829/the-jc-penney-saga-are-poison-pills-good-or-bad-for-investors

    Sears and JC Penney both were taken over by corporate raiders, neither one of these companies needed to go under.

    • there are other factors as noted in both articles but online sales are killing companies like this..i think salon should have included that as well..market share is evaporating as the internet offers everything online..why invest in a shops decor if nobody is going in them?

      • Average real income has been falling for decades now, give it a just a few years and there won’t be nearly so many people who even have a computer, credit card, paypal account, or even a phone… then the online retailers will see the same issues as have already hit the storefront retailers: a lack of customers who can afford their merchandise, and an unwillingness to spend on the part of those who still can because of a perceived lack of value.

        I think the main problem is that the raiders would rather just loot the companies instead of investing in keeping those customers that they still have and lowering their expectations of profit until the economy improves. Similarly, although I think online competition is an issue, I think that they have failed to invest in alternative strategies at reaching customers. High end stores are booming: they pay attention to their customers wants and they provide them. But these corporate raiders do not want to adopt a strategy that requires the recognition of customers as real people. Sears for example could put out a line of discount major appliances. They would be swamped with grateful customers. Better a small profit margin on a lot of items than a large profit margin on things you can’t even sell. People want to feel loyalty: to brands, to stores, to the people with whom they interact: it is security. If these stores would treat their customers like actual people by providing a clean well lit store with an adequate number of employees that are well trained and pleasant, ie well-payed, then their business would increase. It is a model that has worked for Costco for example.

      • “Sears for example could put out a line of discount major appliances. They would be swamped with grateful customers.”

        great point..

        “If these stores would treat their customers like actual people by providing a clean well lit store with an adequate number of employees that are well trained and pleasant, ie well-payed, then their business would increase.”

        example A.

        http://beluscapitaladvisors.com/2013/10/21/sears-vanishing-minds-shocking-14-photos/

  2. dont invest in anything that’s based on consumer spending.

  3. […] http://seeker401.wordpress.com/2014/01/27/what-recovery-sears-and-j-c-penney-are-dying/ […]

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