The retail industry in the United States is struggling for a variety of reasons. Not only are consumers spending less money on luxury items, but many people are using online shopping options instead of going into physical stores.
For old retail companies with large store layouts, this is a disaster to try and work through. Sears is an iconic American company that many people want to see succeed. However, over the past few years, the company has struggled and is now on the brink of bankruptcy. Not only that, but Sears continues to lay off workers without warning. For the latest quarter, Sears announced that same-store sales had declined over 15 percent. This matches the results of the previous quarter as well.
One of the biggest issues for Sears is how large their stores are. In the past, this was a great way to get customers in the door. Many people would spend hours looking around in Sears for certain products.
However, those days are long gone. Today, Sears stores are empty with few customers coming in. This is a bad sign for the future of any retail company. Sears is having trouble driving consumer traffic without heavily discounting merchandise. Even if the discounts work, they will erode the gross margins of the company.
In the coming years, Sears plans to sell the bad stores that are not making any money. However, it going to be hard to find willing buyers to pay for such a large commercial building. In today’s economy, few companies want to invest in large commercial real estate spaces.
Another major problem that is facing Sears is the massive debt the company has on the balance sheet. Over the past few years, the company has taken on more debt in order to stay afloat financially. This has caused numerous issues, and now the company has a revolving debt strategy. Although Sears is not bankrupt, it is getting dangerously close to that point.
If Sears is going to stay in business over the next few years, now is the time to start changing the overall strategy of the company. Drastic actions must be taken in order to keep the company solvent.