Sears Holdings Corp., owner of embattled Kmart, took pains Wednesday to assure shoppers that the discount chain remains open for business, rebutting a recent Business Insider report that stores are in the process of liquidating inventory.
The inventory-clearing process detailed by Business Insider is not a liquidation effort but “a phased project that gets our newly-delivered products on the stores’ shelves immediately rather than in the stock rooms and ensuring that the [customer] does not wait in line at the checkout,” Alasdair James, president and chief member officer for Kmart, and Gareth Glynne, head of Kmart Retail, wrote in a blog post.
Kmart—which a quarter century ago was bigger than Wal-Mart Stores Inc. in the U.S.—has closed a third of its stores in the past 10 years and seen its sales halved in that time, according to Fortune. In April, Sears Holdings said that it will close 68 Kmart and 10 Sears stores this summer in an effort to generate cash.
Sears Holdings Chairman and CEO Edward Lampert says he’s putting money and muscle into the technology it will take to boost Sears' e-commerce segment. If successful, the initiative could bring the retailer back to its roots, when its catalog was the go-to place to order, well, everything.
Many experts have suggested Sears also should beef up its still-admired Kenmore and Craftsman brands, and do all it can to keep those products indispensable to Americans.
But it’s Lampert who some observers say is largely to blame for the downfall of two of the nation's most iconic retailers. With no background in retail, Lampert’s hedge fund first bought a controlling stake in Kmart, then took over Sears, and merged the two under Sears Holdings in 2004. Since then, Lampert has established corporate divisions and competing fiefdoms that hobbled the retailer at a time when it needed to be investing in its stores and its e-commerce efforts, decimating many of its assets in the process, according to critics.
Lampert didn’t get very far with his letter to shareholders earlier this year, in which he acknowledged some challenges and shortcomings, but more or less alleged that critics of the company just don’t get it.
“Because of Sears and Kmart’s longstanding history and cultural impact, we are targeted for criticism when our results are poor,” Lampert wrote. “But it is unfair to evaluate our approach through the rearview mirror without acknowledging the changing circumstances in our industry as well as our bold attempts to change the way we do business.” Lampert also noted that Macy’s and others are now closing underperforming stores, a process that Sears began years ago in order to focus on its better-performing stores, omnichannel efforts and e-commerce.
But Sears problem isn’t just that it’s over-stored, but also that its stores have been neglected—and so has its merchandise. Fiscal Q4 same-store sales at Sears fell 6.9% and declined 7.2% at Kmart, something of an improvement from the past three quarters, when sales at Sears plummeted 11.1% and slipped 7.3% at Kmart. So it's no wonder that Business Insider's speculation so quickly gained traction: Kmart is running out of time, and has been for a while.