As Don Meredith, Howard Cosell’s legendary partner on ABC’s Monday Night Football, would sing, “Turn out the lights, the party’s over.” One can only hope that is not the case for Sears, but the numbers don’t look promising.
For the recent holiday period, like-store sales were down 12 percent at Sears and Kmart combined. More alarming was the fact that available cash had dropped to $258 million from $3.1 billion the previous year, resulting in 20 consecutive negative profit quarters and, recently, the closure of 150 more stores. As a college student planning my professional future, I had seriously considered going to work for Sears. My interest in the company actually went back to trips with my father to the store in search of Craftsman tools or visits to our Allstate insurance agent, who was stationed at the entrance to the store. Upon graduation from college I chose Safeway, but did not lose my interest in Sears. I was impressed by how professionally they handled business. I actually wrote a brief study of Sears and how they got to be the world’s No. 1 retailer.
Two pillars around which Mr. Sears and Mr. Roebuck built their company were well-trained and fairly-compensated employees and a growth model built on a comprehensive diversification plan.
In 1916, Sears, Roebuck and Co. introduced one of the first profit-sharing plans for employees. The sales force also was paid a commission on products they sold or serviced. Unfortunately, by the mid-1980s the commission and profit-sharing plans had been modified so often that they lost their luster.
Diversification was part of the master plan not only to grow the company but to stay ahead of competition. Sears would buy or build businesses like Kenmore, Craftsman, Allstate and Coldwell Banker. By 1993, a weak balance sheet and declining financial performance had forced the sale of most of the Sears companies. The most significant of all, however, is the current sale of America’s favorite brand of tools, Craftsman. Craftsman tools were and still are the leader in the tool business, often called a legendary American brand with tremendous consumer appeal and priced at a value.
Bottom line, Sears needs the money from the sale of Craftsman to Stanley Black & Decker—valued at $900 million over the life of the agreement. Hopefully this will prolong the need to dismantle the company totally.
Chase those sales; they won’t chase you!
After a 40-year career that included executive-level positions with Safeway, Lucky Stores, Appletree Markets and Save Mart/Food Maxx, Art Patch retired from the retail grocery business in 2007. He is a graduate of San Jose State College and the Cornell Food Executive Program. Patch is on the ExecuForce Team of Encore Associates and is a counselor for SCORE, helping new and emerging businesses develop business and marketing plans. He welcomes your feedback. Email him at [email protected].