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