Sears Holdings Lost $1.7 Billion In 2014, Considers This An Improvement

(Scott Miller)

Sears Holdings has many assets: mostly, stores in malls that are slumping toward irrelevance, and strong brand recognition and loyalty among Americans over age 50 or so. The company is fighting to stay in business, and current efforts like offering Sears Canada stock to investors and selling stores to a real estate investment trust and leasing them back are part of that effort. Is all of this working? Well, Sears leadership sounds optimistic.

Closing weaker stores is an important part of an attempt at retail turnaround. Failure to do that is part of what doomed RadioShack, which finally declared bankruptcy earlier this month. That part of Sears’ strategy makes sense. The problem is that Sears expects to hold on to at least some of these customers into the future, something that is, at best, unlikely.

Here, for example, is how the company explains why closing stores doesn’t necessarily mean losing those customers:

During 2014, we closed approximately 234 underperforming Kmart and Sears Full-line stores, the majority of which were Kmart stores. The Company, which has more than 1,700 Sears and Kmart stores, expects to migrate the shopping activity of highly engaged members who previously shopped closed stores to alternative channels. As a result, we hope to retain a portion of the sales previously associated with these stores by nurturing and maintaining our relationships with the members that shopped these locations.

In other words, Sears Holdings thinks that it can hold on to customers in areas where Kmart and Sears stores have closed by maintaining its relationship with those customers by sending them a barrage of “Shop Your Way” e-mails. Usually, we would hope for the best when a retailer proposes trying something like this.

However, we’re only a few months out from the layaway debacle at Kmart, where shoppers whose local stores were closing found confused store employees who tried to call in layaway plans weeks in advance. That was bad enough, but then Kmart canceled layaway plans out from under customers shortly before Christmas, leaving them without certain hot toys that were in short supply, or simply without any of their Christmas gifts and with no refund in sight until after the holiday. That is not how you hold on to customers or attract new ones.

Sears Holdings Reports Fourth Quarter And Full Year 2014 Results [Sears Holdings]