Sears, Roebuck and Co. hasn't outgrown the mall scene, but it's spending more time in other places. Beyond about 785 US mall-based stores in all 50 states, Sears operates 20 Sears Essentials/Grand stores in 10 states, as well as 54 specialty stores that include three dozen free-standing Sears Auto Centers and more than a dozen Lands' End retail stores. Sears' stores sell apparel, tools, and appliances (Kenmore), and provide home services (remodeling, appliance repairs) under the Sears Parts & Repair Services and A&E Factory brands. It also operates a growing online business. Sears was acquired by Kmart Holding Corp. in 2005. The deal formed Sears Holdings, which owns both chains.
Sears operates about 788 stores in 50 states, the District of Columbia, Puerto Rico, Guam, and the US Virgin Islands. Its 51%-owned sister company, Sears Canada, operates more than 115 full-line stores that are similar to the US stores but with a greater emphasis on apparel and other soft goods (as opposed to hardware).
The company's freestanding off-the-mall format -- about 55 Sears Essentials/Grand stores -- is designed to compete directly with supercenters, such as Wal-Mart, by selling consumables, health and beauty aids, housewares, and toys, among other offerings, all under one very large roof. About half the locations have in-store pharmacies. The superstores average about 116,000 sq. ft. and are present in about two dozen states. However, the number Sears Essentials/Grand locations has declined from 75 in 2008 to 54 in early 2013.
Online retail operations consist of sears.com and landsend.com and specialty catalogs. (Sears Holdings has announced plans to spin off Lands' End to shareholders to form a separate, publicly-traded company.)
Sales and Marketing
To capitalize on the power of social media to drive sales, Sears launched the SHOP YOUR WAY membership platform, a social shopping experience where members can earn points, receive additional benefits and interact/shop with each other through shopyourway.com. SHOP YOUR WAY also allows members to engage in cross-channel transactions, such as buy online/pick-up in store; buy in store/ship to home; and buy online, return to store.
In fiscal 2013, the retailer's sales declined 3% versus the prior year, to $$21 billion. Same-store sales continued their steady decline, falling 1.4%, after declining 3% in each of the prior two years. The chain was once again unprofitable, posting an operating loss of $656 million, compared with a loss of more than $1.4 billion in fiscal 2012. The decline in sales is mainly due to the decline in the number of Sears full-line stores and the separation of Sears Hometown and Outlet businesses. The drop off in same-store sales was driven by decreased sales of consumer electronics, lawn and garden, and home appliances, as well as at Sears Auto Centers, typically stronger performers for Sears. The decline was partially offset by increases in apparel and home goods. Sears's US retail stores contribute about slightly more than half of parent Sears Holdings Corp's. total sales.
Sears' aging US stores have lost more than $6 billion in merchandise and services sales since 2007. Much of that has benefited rivals, including Home Depot, Wal-Mart, Macy's, Kohl's, and Best Buy, which have all gained market share at Sears's expense by investing in their retail operations, while Sears' stores have been starved of investment. The retailer has also been shuttering stores, reducing the number of full-line stores in operating by more than 100 locations over the past two years. The number of specialty stores has plunged from about 1,265 in fiscal 2011 to just 54 in fiscal 2013, due to the separation of Sears Hometown and Outlet businesses. In 2012 the company sold 11 stores to General Growth Properties for $270 million.
Lampert, who has a reputation as a shrewd investor, is not a retail veteran and his grand design (or apparent lack thereof) for the Sears and Kmart retail businesses has left many shoppers, investors, and retail analysts perplexed. He has criticized the retail industry for recklessly expanding retail space at the expense of profitability and appears to see store closures at his Sears and Kmart chains as progress toward achieving better returns for shareholders, rather than a sign of defeat.