Sears Had The Same Same-Store Drop As Macy's. How Can That Be?

In a sign of just how baffling big-chain retailing has become, Sears (NASDAQ:SHLD) reported on Thursday (Aug. 22) that its same-store sales dropped by 0.8 percent—exactly the same as Macy's (NYSE:M). The difference: Macy's profit inched up, while Sears's loss increased to $194 million, Bloomberg reported.

Well, that's one difference. Another is that while sales rebounded at Macy's upscale subsidiary Bloomingdale's, at Sears's downscale Kmart same-store sales dropped by 2.1 percent. Online sales for and were up 20 percent, about the same as the overall e-commerce increase of 18.4 percent. (Macy's doesn't break out e-commerce sales, but we're guessing it was a lot higher.) That 20 percent e-commerce rise is nice, but e-commerce is only 3 percent of Sears sales.

A bigger block of Sears revenue comes from its Shop Your Way loyalty customers, who account for more than 65 percent of the retailer's sales. But loyalty program members also redeemed rewards points at a higher rate than usual during the quarter. Even Sears's one real strength is also a liability.

None of the financial problems at Sears are a surprise. Since Eddie Lampert merged Sears with Kmart eight years ago, the combined chain has seen 26 straight quarters—that's six and a half years—of sales declines. What is striking is that Sears itself isn't actually doing that poorly, at least in the U.S. Lampert has taken a throw-it-all-against-the-wall-and-see-what-sticks approach that has yielded some terrible ideas, but the loyalty program and the e-commerce Marketplace have worked reasonably well, and with a sales drop that's no worse than Macy's, it doesn't look like a chain on the verge of collapse.

That doesn't change the fact that it is in deep trouble. Kmart can't survive trying to compete against Walmart and dollar stores. Sears itself is now having trouble selling appliances, one of its reliable categories. Unless Lampert comes up with some ideas for either unwinding Kmart or cranking up Sears, being no worse than Macy's isn't going to last long.

For more:

- See this Bloomberg story

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