Is a turnaround at Sears Holdings on the way?
WHAT IT MEANS AND WHY IT'S IMPORTANT — One of the most enduring rules of business is that when customers stop coming through the door, then the time has come for a reinvention.
Recent decisions by Sears Holdings indicate that despite its financial problems, it's not too late for a comeback. The hiring of Ron Boire to head merchandising could give it new direction, while the introduction of the Fitness Flagship store-within-a-store allows Sears to capitalize on an area in which it has long specialized while taking advantage of the growing interest in health and wellness.
(THE NEWS: Kmart parent brings in new merchandising leader. For the full story, click here)
In particular, hiring Boire — whom president and CEO Lou D'Ambrosio singled out as somebody known for engineering turnarounds — indicates that Sears Holdings is looking to engineer a turnaround, and given its situation, it could certainly use one.
At the end of December, the company announced it would shutter more than 100 stores, as well reduce domestic inventory by $300 million. This came in the wake of disappointing sales results that showed a 5.2% decline in comps for the eight-week period ending Dec. 25. The company posted similarly disappointing results in third quarter 2011, including a $421 million net loss and a 0.9% decline in comps at Kmart, a 0.7% decline at U.S. Sears stores and a 7.8% decline in the company's Canadian stores.
Sears is one of the oldest major retailers in the country and an American cultural icon, but it's also old-fashioned compared with competitors like Target and Walmart. There's nothing wrong with the products it sells today in and of themselves, but today's consumers are more likely to go to specialty retailers like Home Depot, Best Buy and Macy's to buy the tools, appliances and clothing that past consumers would have purchased at Sears.
If Sears Holdings wants to make a comeback, it's going to have to show consumers and investors why it's special and what it can do that other retailers can't.