by
new York
CNN business
—
Tracy Easterling spent about an hour on Sunday shopping at Sears, which used to be one of her favorite stores. In the end she had nothing to show but memories.
Easterling was at Sears in her hometown of Jersey City, New Jersey, one of only 15 Sears full-line restaurants still open. Sears was once the largest and most important retailer in the world.
“It’s the first time I’ve been here in a while,” she said as she browsed the shoe selection where the shoes were still boxed and not on display.
“I just came in looking for sales. But it’s so empty and there’s not a lot of choice,” she said. “You used to be able to get almost anything you needed in a store.”
Easterling said that when she told friends she was stopping at Sears, her reactions were, “Is there another Sears that’s open?”
“Look at it. It’s as empty as can be,” she said, looking down the aisles without seeing any other customers despite the busy weekend after Thanksgiving.
Most of the stray shoppers at Sunday’s Jersey City store were older and, like Easterling, could remember Sears in its heyday.
Many left quickly without finding what they were looking for. Some of the younger shoppers said they only stopped by because they could remember being here as a kid.
“I shopped here with my great-grandmother years ago,” said Razeyah Surrell, 23, who was shopping with his girlfriend Taryn Reczkowski, 22, looking for a pair of pants. They quickly left after Surrell couldn’t find what he was looking for.
“I walked in and was like, ‘Wow, that’s sad,'” Reczkowski said.
It was a slow, quiet death for an iconic chain whose pioneering catalog and anchor position in many malls across the country made Sears once both the Amazon (AMZN) and Walmart of its time.
When Sears and Kmart merged in 2005, they had 3,500 US stores and more than 300,000 employees. But both brands were already in a downward spiral. After the merger, the company focused on selling its more attractive properties and buying back shares to shore up the falling share price, rather than investing in modernizing stores to make them competitive.
The company filed for bankruptcy in 2018. Eddie Lampert, the hedge fund operator who orchestrated the disastrous Kmart merger and served as the holding company’s CEO, bought what was left of the company out of bankruptcy in early 2019. It had promised to turn things around after it paid off much of its debt, unprofitable deals and less attractive leases.
The company that emerged from bankruptcy in early 2019 — overly optimistic as Transformco — owned 223 Sears and 202 Kmart stores nationwide. But less than four years later, it’s barely on life support, as evidenced by its tiny brick-and-mortar footprint and lack of buyers.
Now, experts say there’s basically little to no reason to keep even what few stores it still has open.
“Sears has been going down the drain for a long time. There is no chance it will be revived,” said Neil Saunders, managing director of GlobalData Retail. “Nobody but Eddie Lampert knows why he’s keeping these remaining stores open. You can’t get the economics to work with that amount of business.”
As for why Sears hasn’t pulled the plug just yet, Saunders said: “It could be that if he closes all business, there might be a penalty in some contracts or agreements. Or maybe they’re open because Eddie Lampert has a very odd take on the business. He still seems clinging to this illusion that he can bring her back. A lot of that could be about ego.”
While the company’s demise now seems inevitable, it needn’t have been, says Mark Cohen, director of retail studies at Columbia University and former CEO of Sears’ Canadian unit before the Kmart merger.
He said Sears’ experience in running its catalog, which contained an all-encompassing list of products, positioned it better than other traditional retailers to move early into online sales. And he said Sears has better leases than competing department store chains.
“It could have been a rival to Amazon. It was the Amazon of its time,” said Cohen. “Undoubtedly, Sears should have closed stores and consolidated holdings, but its real estate holdings would not have been the albatross they were for other department store chains. Nothing would have prevented him from leading a second life as a world champion. Ultimately, this was about the incompetence and misconduct of his leadership.”
If — or maybe if — Sears closes its last store, it will join a long list of retailers, including RadioShack, Payless Shoes, Gymboree, and American Apparel, that have emerged from bankruptcy only to subsequently go out of business in a short period of time walk.
It is difficult to get an accurate count of the remaining open deals in the company. The total of 15 remaining Sears stores are down about a third from 23 at this time last year. But those numbers come from what’s listed in the store locator on the company’s website. Spokespersons for Sears, Transformco and Lampert’s hedge fund did not respond to questions about the number of remaining stores, the company’s profitability or its plans for the future.
The Sears name could survive even if the last full-line stores close.
After the bankruptcy, Transformco bought the previously spun-off holding company, which includes a chain of franchised stores trading under the Sears Hometown name. The stores are a fraction of the size of full-line Sears and focus on selling tackle, tools, and outdoor gear.
There were about 700 of these stores right before Transformco Sears reacquired Hometown in 2019, but they’ve also steadily closed. About 100 stores closed earlier this year, with just over 100 open today.
Kmart has shrunk to an even smaller size.
A year ago, there were only six Kmart stores in the US mainland and six more in Puerto Rico, Guam and the US Virgin Islands. Since then, the Puerto Rico store has closed and there are only three stores left on the mainland, one each in Florida, New Jersey and Long Island, New York, according to Dick Barta, a former Kmart employee who closely follows store closures has the years. The Kmart website backs up these numbers.
The holiday shopping season got off to a strong start, and that could help Sears breathe a little longer. But if the US economy does plunge into recession, as many economists fear, it could be the final straw leading to its demise, said Katie Thomas, head of the Kearney Consumer Institute, an in-house think tank at consulting firm Kearney.
“It’s hard to justify consumers going to these stores when they’re withdrawing their spending,” she said. “I think that [a recession] could be the last nail in the coffin.”
When Sears might finally close the last remaining stores, Cohen said it really doesn’t matter at this point.
“The time of death was 2005,” he said, referring to the year Lampert took control of the company.
