
Sears reports $748M net loss [pdf] - grizzles
http://searsholdings.com/docs/investor/eap/q3-2016-shc-earnings-release.pdf
======
mmanfrin
They raced to the bottom with their hallowed store brands, cut corners to make
margins and in the end shattered the value of the name of appliances like
Kenmore or tools like Craftsman.

If you've built a brand on the idea of durability and reliability, and then
build shoddy products that coast on the reputation, that reputation goes away
and leaves you with a brand that no one wants to buy.

I've been looking at a new fridge, and I'd consider a Chinese Haier over a
Sears Kenmore, ceteris paribus.

It used to be that Sears was mighty because of the catalog; then they were
mighty because of logistics; then they were mighty because of the iron-clad
house brands. Now Amazon is the new catalog, Walmart beats them on logistics,
and their brands are mud. Sears has nothing. You'll see a Sears bankruptcy
within 5 years.

~~~
roflchoppa
I picked up some craftsman metric/SAE box and open's the other day from the
discount section, the build quality is not bad at all. I would not compare it
to Snap-On, but a whole other tier than that of HF.

~~~
91bananas
Recently I've given up on craftsman all together. Harbor freight owns up to
being Chinese junk, but still gives a life time guarantee on and hand tools
now. So if they're half the cost of craftsman but break and replace the same,
why buy their name brand Chinese junk when I can buy generic stuff from
probably the same factory?

~~~
syshum
My tool buying methodolty is

1\. Buy Harbor Freight Version....

2\. If a break the Harbor Freight tool, then I will look at a SnapOn, Dewalt,
Ridged, or other Contractor/Professional Brand

I have very fews tools in the #2 category...

~~~
mikestew
Though waiting for number 2 might give you frustration in the mean time.
There's more to a tool than whether or not it breaks. When that steel bolt has
cold welded itself to the aluminum engine head, you're going to want the most
precision-machined socket you can find. Because if you bugger it up, your day
is about to get a lot worse while you ponder whether you can burn the bolt out
with an acetelyne torch before you melt the aluminum. Granted, I don't run
into that a lot now that I no longer turn wrenches for a living.

That said, I've got a lot of HF in my toolbox and can't say I've been unhappy
with them. When I'm 100 miles from nowhere and my motorcycle breaks, it'll be
HF sockets and Torx bits that get me back on the road.

~~~
syshum
I am mainly a Woodworker as a hobby and IT has a Profession

My Cars are worked on by Professionals so I do not have alot of Automotive
tools or needs

------
dharmon
The Buffett Curse: Any comparisons to Warren Buffett will immediately result
in disastrous investment performance.

In this case, hedge fund manager Eddie Lampert took control of Sears about 10
years ago, merged it with K-Mart, and 3 years ago installed himself as
chairman and CEO. He's been selling off assets left and right to keep it
afloat (real estate, Lands End, etc.)

Prior to this he had been compared to and called "the new Buffett" due to
similar investment styles (if you squint real hard). Since then Sears has lost
over 90% of its market value. Yikes.

For another example, see Bill Ackman, who has been absolutely slaughtered, and
seems to be asking for more. It started almost immediately after Fortune put
him on the cover with the slug line "Baby Buffett".

~~~
conistonwater
Wasn't this also a case of pretty spectacular mismanagement on CEO's part? I
remember reading stuff like this:
[https://www.bloomberg.com/news/articles/2013-07-11/at-
sears-...](https://www.bloomberg.com/news/articles/2013-07-11/at-sears-eddie-
lamperts-warring-divisions-model-adds-to-the-troubles), it was rather
fascinating. It seems from that that it wasn't just a case of overly rosy
expectations.

~~~
dharmon
Yeah, definitely. Smart investors with no management or operations experience
install capable people as CEO, as Buffett has done on several occasions.

Arrogant investors seem to think, "running a business can't be _that_ hard..."

~~~
huherto
> Arrogant investors seem to think, "running a business can't be that hard..."

Running a country can't be that hard...oh my god.

------
ChuckMcM
disclaimer (both my sister and my mom worked for sears at one time)

I think Sears has lost its way because a new generation of shoppers don't see
Sears as vital. Back in the late 1800' when it was founded the idea that you
could look in a catalog and order something, only to pick it up at the store a
week later was nothing short of a revolution. And as a result Sears because
_exquisitely_ good at logistics. For decades the ability to move product where
it needed to be, when it needed to be there, at scale allowed Sears department
stores to dominate the retail market. It was rare to go to Sear's and discover
what you wanted was out of stock, and even then they could tell you to either
come back in 1 or 2 days to pick it up, or they would deliver it to you. That
service, that experience, was enabled and powered by logistics.

Old companies can get senile though and Sears did. They forgot they were a
logistics company and started trying to compete with Internet retailers as a
retail company. If instead they has offered white label logistics service for
internet merchants Amazon wouldn't be Amazon, instead it would be a buying
consortium that was shipping everything through to consumers through Sear's
logistics infrastructure. Instead you've got Amazon of today re-creating what
Sear's had 20 years ago but using more advanced technology.

~~~
mbesto
> They forgot they were a logistics company

Sears was the Amazon of 80's. Peering through the lens of time, the concept of
a mail order catalog was no different from the convenience of today's Amazon
e-commerce experience. They are both points on an evolutionary timeline of the
retail distribution experience. Sears disrupted retail, just like Amazon has
disrupted Sears.

What's interesting about companies like today's Amazon is that they are scared
shitless they'll end up becoming another Sears and eventually dead in the
water, so they are constantly investing their own profits into re-inventing
themselves (see Amazon Go and drone delivery for example). And hence why the
PE ratios of these companies (Amazon, Google, Apple, etc) are catastrophically
high.

~~~
zimzam
The PE ratio of Amazon is catastrophically high (175.8) but Google & Apple are
not.

The S&P 500's average PE ratio is currently 24.22 [1]. Google/Alphabet is a
little higher than average at 27.9, and Apple is solidly in blue-chip
territory 13.6

[1]
[http://www.wsj.com/mdc/public/page/2_3021-peyield.html](http://www.wsj.com/mdc/public/page/2_3021-peyield.html)

------
kirykl
Anecdote: Recently I had a sears gift card number but not the actual gift
card. Tried to buy vacuum in store with just the number not the card, and they
said no way, even said they should call corporate security to investigate my
scam. I went online to sears.com in the store, paid for my vacuum with the
gift card number and selected in store pickup. Left with the vacuum.

~~~
kevinstubbs
For fun, you could buy a few more cards like that and see what kind of mess
happens. Like what Steve Wozniak's does with his $2 bills
([http://archive.woz.org/letters/general/78.html](http://archive.woz.org/letters/general/78.html)).

~~~
nodesocket
If you showed up to Cheesecake Factory and for the bill wrote your credit card
number, expiration, and CVV on a napkin, do you think they would accept that?
In all seriousness, how was that fun for you?

~~~
kevinstubbs
Straw man argument? Doing that doesn't sound fun at all, and is totally
different than what OP was talking about in Sears. Trying to use the giftcard
number to see how high their staff will escalate to deal with this "scam" is
hilarious, otoh.

------
jbandela1
When I see articles about how sears is now, I always think of this

[http://www.metafilter.com/62394/The-Record-Industrys-
Decline...](http://www.metafilter.com/62394/The-Record-Industrys-
Decline#1742245)

Sears could have been what Amazon is today.

~~~
massysett
20/20 hindsight and all. Amazon still has practically no retail footprint.
Sears' big business was bricks-and-mortar retailing, not catalog retailing.
The catalog was shrinking and dying. Under the circumstances it was perfectly
reasonable for Sears to shut down the catalog and focus on stores.

Also, Amazon did not start out being anything like what it is today. For years
it was just books. I remember as they added departments, they would tack an
extra tab onto the homepage--"CDs", "Video", etc. So what was Sears going to
do? Instantly transport the entirety of a dying catalog business to a non-
existing consumer Internet? That wouldn't parallel Amazon at all. Not to
mention that Sears did not have access to a bunch of giddy investors who were
willing to pump in money despite no sign of profitability.

Only under a superficial analysis could Sears have been what Amazon is today.

~~~
tomhschmidt
Many other large brick-and-mortar retailers have spun up relatively successful
eComm businesses (Target, Walmart, Macy's). While those aren't to the scale of
Amazon, I really don't think this is an excuse.

~~~
massysett
> While those aren't to the scale of Amazon

Since OP's point was

> Sears could have been what Amazon is today

it's quite relevant that Target, Walmart, Macy's are not nearly to the scale
of Amazon.

~~~
mrmirz
Similarly (and probably off topic), Amazon is not nearly to the scale of
Walmart when you look at overall sales. Walmart's overall revenue is about 5x.

It may seem like Walmart is following the footsteps of Sears, but they are not
out of the game yet. They need to face the innovator's dilemma head on and do
it quickly because the broader issue is their e-commerce growth rate is
declining instead of accelerating and the way people shop is fundamentally
changing. They need to be dominant in e-commerce to be a dominant retailer in
the future.

Walmart is better positioned than anyone to take on Amazon online. Their
massive distribution footprint is a huge asset they are not leveraging. They
need to morph into a logistics company and announce an all-encompassing same-
day delivery service. They also need to completely re-haul their web/mobile
UX.

I would gladly buy from Walmart. Amazon is just a lot easier right now. In the
end, Amazon is not all that differentiated and if Walmart had some strong
technological leadership, they could certainly close the e-commerce gap.

~~~
goldenkek
walmart has a 2 day delivery program similar to prime for 40 dollars a year.
they need to advertise better..no one knows (you didnt did you?)

------
somedudetbh
Every time I read something about Sears troubles, it makes me remember this
metafilter comment from 2007: [http://www.metafilter.com/62394/The-Record-
Industrys-Decline...](http://www.metafilter.com/62394/The-Record-Industrys-
Decline#1742245)

Excerpt:

"...In 1984 [Sears] starts a joint venture with IBM called Prodigy, an online
computer service, sort of a prototype AOL. In 1985, Sears launches a new major
credit card, the Discover card. For the next eight years, the only credit card
you can use at Sears is Discover.

At this time, the early 80's Sears is the largest retailer in the U.S.

By 1993, the 100th anniversary of the Sears Catalog, Sears had built up
considerable goodwill in the mind of consumers. They weren't the lowest price,
but they had what you needed at good prices and the service was second to
none. […]

This is 1993. In quite possibly the greatest example of corporate
shortsightedness, Sears shut down it's mail-order business in a cost cutting
measure. It spins off Allstate that same year, and soon dumps Dean Witter and
Coldwell Banker.

In 1993, Sears had the most extensive and sophisticated mail-order retail
operation on the planet and they closed it.

Two years later, Amazon.com launched, and was soon selling everything that
sears sold through it's catalog. By the late-90's Walmart's push of low-cost
China imports killed Sears retailing. Online banking takes off. Credit card
use surges as mail order and retail purchases are shifted online.

Sears had its own computer network in 1993. They had access to IBM, they
should have understood the power of the internet. All they had to do was shift
the catalog online instead of killing it off, promising in store returns and
the same Sears satisfaction guaranteed. Discover could have been the credit
card of choice for security and protection online. Dean Witter could have been
what Schwab, E-Trade and Ameritrade became. Back in the mid-late 90s when many
people were hesitant to use credit cards online, Sears could have been a
familiar face online."

------
sliken
When sears killed their lifetime guarantee on wrenches, the local competition
put an aquarium in their tool section. Throw in a "useless" sears wrench and
you could pick up a free replacement with a life time guarantee. Seemed pretty
effective, the clerk claimed they had to empty the aquarium every week or so
for the first year.

------
brilliantcode
Recently shopped at Sears in Vancouver. Zero to no customer activity. No good
deals but also virtually no one helping me check the fuck out of there.

Waited hours only to see the fucking cashier or staff chatting it up with each
other with a line queue forming.

Same experience in The Bay. I think these traditional marts are on their way
out. I have zero sympathy, kill this fucking monstrosity.

~~~
twblalock
Shopping at Sears was a depressing experience for years. They really let the
stores fall apart, employees clearly didn't care, the products were crap, etc.
I think they made most of their money off Craftsman tools and Kenmore
appliances.

~~~
GunboatDiplomat
Think Sears is bad, try KMart.

~~~
douche
It's like something out of Mad Max. I had the misfortune of popping into one
on the way to the airport for a vacation, after I realized I hadn't brought a
watch. I swear there were tumbleweeds blowing down the aisles. While I was
waiting to check out, I watched a toothless young lady harangue the cashier
into selling her several sets of Boston Bruins towels that were clearly marked
as $19.99 for $5 apiece. The cashier brought her manager over to doublecheck,
shoulders were shrugged, and zero fucks were given. As I was leaving, a
befuddled elderly lady was trying to return items she'd bought at a TJ Maxx.
There was no TJ Maxx in this strip mall, nor within five miles. I got the hell
out of there with my cheap wristwatch and resolved never to return.

~~~
countingteeth
The most anachronistic part of this comment is the wristwatch.

------
aczerepinski
You know things are bad when this is the type of news that boosts your stock
price by 5%.

------
wnevets
I kinda forgot they were still in business. What does Sears offer that no one
else does?

~~~
madengr
Maybe Craftsman hand tools, but that's it. Those are well made, and the socket
wrenches are lifetime warrantied (they will fail, but they will just give you
a new one). Craftsman power tools are garbage; might as well get them at
Harbor Freight.

We always bought appliances from sears, but recently the refrigerator was from
Lowes, and the microwave and oven from Amazon.

They don't stock appliances (very long waits for refrigerators) and the sales
people can be horrible. The fridge we bought recently sight unseen, online.

The checkout process at Sears is fully fucked up. A convoluted connection of
iPads, credit card swipers, and ancient IBM registers.

Best Buy also sucks, so it's not like they have much local competition.

I swore I'd never buy a large appliance from Amazon, but the in-wall oven was
just fine, and I installed it no problem. If you can do your own appliance
installations, I suppose online is the way to go.

~~~
ssharp
Sears is a jack of all trades store that doesn't have much value these days.
Before Home Depot and Lowes were everywhere, Sears was a good option for
appliances, lawn care, power tools, etc. They were good for fitness equipment
before Dicks. They were good for electronics before Best Buy. I suspect a
place like Kohls took over their clothing audience as well.

Of course the internet didn't help them much either.

I'm sure someone will gladly buy up Craftsmen when it goes up for sale but I
agree with you that it's their only exclusive asset that sets them apart.

~~~
this-dang-guy
Sears died for me when the internet replaced the catalog.

As a kid, we'd spend literally _hours_ pouring over the Sears Catalog to
circle christmas/b-day gifts (each kid with a different color pen), and we'd
actually fight each other to get to it first.

That culture doesn't really exist anymore, and Sears really didn't adapt to
it. Amazon would be the modern version, I guess.

~~~
btgeekboy
The Sears catalog and the JC Penney Christmas catalogs. Such an amazing time
of year.

~~~
this-dang-guy
I still get a bit of a thrill from the Quadratec and Cabelas catalogs, but
nothing on par with that. It was really the best.

My first Nintendo came from that Sears Christmas Catalog :)

------
kevin_thibedeau
They need to streamline the stupid checkout process where you get hammered
with incessant questions and wait for 3-feet of receipts to print out.

~~~
PhantomGremlin
_incessant questions_

You mean like "do you want to apply for a credit card?"?

There's a reason for that. The associate gets $2 for every store credit card
and $4 for every bank credit card sign-up. It's a big deal to a kid making
$10/hr. But it certainly doesn't help the overall experience for those people
who don't want another credit card.

~~~
marktangotango
I'm glad they get a commission on those. Unlike the poor folks at Best Buy who
get nothing for upselling the worthless warranty extensions. I last asked a
few years ago so this may have changed.

------
jimmydddd
And they phased out their catalog. If they had waited a few years, they could
have put it online and been Amazon. Reminds me of a smaller chain called
Service Merchandise. You could order from an electronic kiosk in the store,
and your product would come out on a conveyor belt a few minutes later. If
they had hung in a bit longer, they could have phased the kiosk ordering to
the internet.

~~~
smelendez
Astonishingly:
[https://www.servicemerchandise.com](https://www.servicemerchandise.com)

------
electic
Sears mostly has a big marketing issue. I almost never see them online. No
online advertising. No social media. Nothing to show they are at all connected
to the real world. My guess is they are still doing TV adverts and I think a
lot of people do not watch traditional TV anymore and it is costing them mind
share.

~~~
ChuckMcM
They are waiting for you to come to the mall so they can engage in personal
face to face selling.

------
rbanffy
Isn't this that CEO who actually believes in Ayn Rand?

~~~
seren
He is.

I remember reading that article some times ago :
[https://www.bloomberg.com/news/articles/2013-07-11/at-
sears-...](https://www.bloomberg.com/news/articles/2013-07-11/at-sears-eddie-
lamperts-warring-divisions-model-adds-to-the-troubles)

It has been posted a few time to HN.

------
RijilV
Such a shame really. I get how they were blind to it, but sears ran a
successful mail order business for decades before the Internet was widely
available. What a missed opportunity, usurped by a clever computer tech from
the fincial industry. Even when it was clear books were working, sears sat on
the sidelines with their print catalog oblivious to the online world.

------
desireco42
It breaks my heart what this guy Eddie Lampert did to this company. I used to
work as a consultant for Sears and have fond memories of my time then.

Sears was, for as long as I know them, been mismanaged by their executives.
They would spend insane money to hire consultants and developers, only to
change direction after less then a year and fire everyone.

------
WhitneyLand
I didn't know for sure they were still in business.

Who shops at Sears? For what reason?

------
okonomiyaki3000
This is genius! They won't have to pay taxes for the next 20 years! Brilliant!

------
grizzles
If I had a crystal ball and could look into Amazon and Sears's respective
C-Suites, this is what I imagine I'd see:

Amazon Manager to subordinate: How is the progress going on our new jet and
drone fleets?

Sears Manager to subordinate: Why the HELL aren't our website sales up?!?!

~~~
1_2__3
All you're describing here is how effective Amazon's marketing department is.

~~~
grizzles
I don't think they bought a fleet of jets for marketing. My point is about
their respective cultures. Amazon's culture is just flat out better.

Amazon just entered the retail grocery business. When they did it, they looked
at the process and noticed that in the existing process everyone was double
handling merchandise. Once when they select it, and once when they checkout.
So Amazon decided to make it a single handling process, making life a bunch
easier for consumers. That also decreases purchase friction, which is great
for Amazon.

That thought process illustrates why Amazon is the leader and will continue to
humble it's rivals. It will take a huge culture change, and a probable
industry consolidation before the likes of Sears will become competitive
again.

~~~
JoeAltmaier
Underestimating on the grocery thing. Handle each can of beans

    
    
       taking from the shelf to the cart
       from cart to checkout belt
       from belt to bag (ok they help with this one)
       from bag to car (several at once)
       from car to counter in pantry
       from bag to shelf

and later

    
    
       from pantry shelf to kitchen counter
       from kitchen counter to trash/recycle bin
       from bin to curb
    

Taking just one of those out is not much benefit, marginally?

