Opinions Are Everything

Yes, I am aware that it has been a long time (over a year in fact) since I last posted and I am truly sorry for it. However, I am not here to go into personal details and I will only share if my readers want more info. But I have decided to come back and I really mean it this time. 2012 is almost here and we all know that this is the year that the end is supposed to happen (which I will go into more detail about later on). However, the real reason is that I wanted to bring ethics, politics, social issues, and religion back to the forefront. 2012 is also the election year and I want to throw in my opinion. But today I am going to start off with the news about Sears.

As we all know that around 2008 the economy started to fall and we have since seen a big slump in retail. After much Bush bashing, Obama has finally slowed down on it for a while and started creating his own negative effect. Unlike his campaign promises of hope and change, we have remained in the slump. Many stores have shut down all together (i.e Circuit City, Borders, etc). But it has also given new life to mass discount retailers such as Kmart and Sears. This was of course all good news and every time I went to either store’s crowds have always been there. So the news of Sears Holding Company closing 100 to 120 stores was shocking.

Sears Holdings has released a press release stating that they will be closing up to 120 under performing stores due to lack of expected revenue. While they haven’t released a list of what locations will be shut down or how many jobs will be lost yet, they do promise to post the list to their official media website. In the mean time here are the details.

Close 100 to 120 Kmart and Sears Full-line stores. We expect these store closures to generate $140 to $170 million of cash as the net inventory in these stores is sold and we expect to generate additional cash proceeds from the sale or sublease of the related real estate. Further, we intend to optimize the space allocation based on category performance in certain stores. Final determination of the stores to be closed has not yet been made. The list of stores closing will be posted at www.searsmedia.com when final determination is made.

Excluding the effect of store closures, we currently expect to reduce 2012 peak domestic inventory by $300 million from the 2011 level of $10.2 billion at the end of the third quarter as a result of cost decreases in apparel, tighter buys and a lower inventory position at the beginning of the fiscal year.

Focus on improving gross profit dollars through better inventory management and more targeted pricing and promotion.

Reduce our fixed costs by $100 to $200 million.

I am not sure what to say about this. Sears has always done well when I have gone in my local location and same with Kmart. While I know that Kmart bought Sears while they were hurting, I am not sure if either company had enough common sense to make this choice. Both have been hurting for a while now and Kmart closed most of their nicer stores around 10 years ago. Now Sears has been affected by them in a bad way, well depending on the location actually. It just makes them look like they don’t know what they are doing. I am sure that if they spent time competing more with Walmart & Target they might actually find their niche. But they seem busy trying to focus on tools or becoming a grocery store. I hate to see them hurting, but they need to pull their act together quickly.

However, with that being said I will add in that I do think that they are doing better than they are letting on. Despite that I wouldn’t be surprised if one of their reasons are the fact that they are uncertain about next year. It seems like we are not sure what will happen in politics and the economy, so I am assuming more companies will follow.

So tell us how tell us how you feel about this news. Have you shopped at these stores in the past few years? If so, what do you think about their strategy? Is it working or not?