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Tuesday, December 27, 2011

Sears Holdings/KMart to close up to 120 stores after years of ineffective strategies, poor sales

English: This is a Kmart in Niagara Falls
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Sears Holdings Corporation, which owns former Troy, Michigan based KMart Retail Stores nationwide, plans to close between 100 and 120 locations after poor sales during the holidays and previous commerical retail quarters.

KMart and Sears, record of broken promises and missed expectations

Formerly named KMart Corporation, the retailer filed a chapter 11 bankruptcy filing in 2002. The mist of 're-organization' allowed KMart to permanently laid-off nearly 34,000 workers, shed workers pension guarantees and be taken over by ESL Investments, a hedge fund.

Ex-Chairman and CEO at the time of bankruptcy, Charles Conaway, received $23 
million in compensation for 11 months of work. In a case of protecting the 1% moment, Conaway negotiated a $6.5-million lumpsum payout if he was "terminated" within 
18 months. Ironically, the following day, Kmart filed for Chapter 11 bankruptcy

Mark Schwartz, KMart's former President and COO, during the bankruptcy walked away with his $3-million retention loan. Its unsure to date, if Schwartz's have paid back the nearly ten year old loan or was it written off as the KMart's 'bankruptcy' proceedings.

ESL Investments, named its CEO Eddie Lampert to be Chairman of the newly form Sears Holdings, including KMart valuable 2000's era commercial real estate properties. Lampert, who was briefly kidnapped but returned by captures' two days later in 2003, led the efforts to merge Sears/KMart Holdings, into Sears Holding Corporation in 2005.

A New York Times article referenced Lampert promised after the merger, that Sears Holdings will be “unrecognizable” in 30 years. If the condition of KMart's older appearance stores were a part of Lampert's strategy, its' either working as planned or a massive failure.

David Friedman, Sears Holdings’s new senior vice president and president of marketing, played down the importance of appearance of KMart stores in 2010.
“The customer’s experience is made up of lots of pieces,” he said to the New York Times “The in-store experience is one of those that matters a lot, and we believe that the physical plant is one piece of it, but we believe the associates and the products drive the in-store experience.” 
Guess the 'anonymous donors' stories -or spin, you decide- walking up to various lay-away's at KMart locations nationwide paying off outstanding accounts, hasn't help Sears Holdings profit margins or 'in-store experiences' to date.

Lack of modern appearance in store, competitive forces, led Sears Holdings continuing decline

In the case of KMart, competitive pressures by other low/mid prices retailers of Wal-Mart, Target and lower point stores Dollar General, have indeed hurt the retailers' bottom line. Another fact Sears Corporate Holdings has failed to realize is KMart stores overall lack-luster appearance do impact the bottom line.

Struck within a 1970's timewarp, KMart's stores fail to provide customers with shopping experience received at other competitive retailers. The metal shelving is old, floors although well maintained is out of date and food courts lack available staff to serve customers. 
"There's no reason to go to Sears," said  independent retail analyst Brian Sozzi, "It offers a depressing shopping experience and uncompetitive prices."
In an internal memo on December 27th to employees, CEO and President Lou D'Ambrosio said that the retailer had not "generated the results we were seeking during the holiday."
The company's revenue at stores open at least a year fell 5.2% to date for the quarter at both Sears and Kmart, the company said Tuesday. That includes the critical holiday shopping period.
Sears said it will no longer prop up "marginally performing" stores in hopes of improving their performance and will now concentrate on cash-generating stores.
"These actions will better enable us to focus our investments on serving our customers," D'Ambrosio stated to the Associated Press"We will bounce back and become stronger than ever," he said.
Sears Holdings hasn't yet acknowledged how many jobs will be lost with soon-to-be closed locations, after the New Year.

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