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Consultant: Sears, Like Titanic, ‘Looks Set to Sink’

Consultant: Sears, Like Titanic, ‘Looks Set to Sink’

Sears’ third-quarter earnings followed the company’s downward financial trend, inspiring conjecture about the possibility of the company’s demise.

“Sears keeps promising investors a turnaround but its results only seem to get worse,” Fortune magazine says.

This month, Sears Holdings Corporation released financial results that showed continued revenue declines. The company’s revenue dropped to $5 billion, decreasing by about $721 million from the third quarter in 2015. Same-store sales dipped 7.4 percent, with a 10 percent decrease for Sears stores and a 4.4 percent decrease for its Kmart locations.

Operating fewer stores contributed to the declines, the company reports.

Retail consultant Neil Saunders compares the company to a sinking ship, according to CNBC. Financial analysts view the retailer as at risk of bankruptcy, Business Insider says.

“In the movie ‘Titanic,’ there is a line where, realizing chaos is about to ensue, one character helpfully notes, ‘It’s starting to fall apart. We don’t have much time,'” Saunders says. “Such a sentiment could be well applied to Sears. The analogy with ‘Titanic’ is also apt; not least because while Sears was once a titan of U.S. retail, it now looks set to sink.”

To help reduce its losses, the company planned to close 64 Kmart stores in December, following the closures of dozens of Sears and Kmart locations earlier this year, CNBC says. Edward S. Lampert, Sears Holdings’ chairman and CEO, has discussed closures and other plans for improving the retailer’s performance.

“We remain fully committed to restoring profitability to our company and are taking actions, such as reducing unprofitable stores, reducing space in stores we continue to operate, reducing investments in underperforming categories and improving gross margin performance and managing expenses relative to sales in key categories,” Lampert says.

The retailer is also looking for ways to use its major brands as part of its recovery, potentially selling Craftsman, DieHard and Kenmore.

“There can be no assurance that we will complete one or more transactions, and we also intend to take actions on our own that present the opportunity to improve the economics of these brands and business, including potential externalization through non-Sears Holdings channels,” the company reports.

About Renee Changnon

Renee Changnon
Renee Changnon is an assistant editor for Hardware Retailing magazine. She reports on industry news and new products, visits retailers and attends industry events. She graduated from Illinois State University, where she earned a degree in Visual Journalism and was the features editor for the school newspaper, The Daily Vidette. After college, Renee worked for Jimmy John’s, where she implemented marketing and promotions initiatives at franchise locations across the country. Renee is from Champaign, Illinois, and is new to Indianapolis. She enjoys reading, Netflix marathons and exploring her new city with friends and family.