Sears Continues To Report Financial Problems (NASDAQ: SHLD)

Analysts are expecting Sears to announce dismal fiscal first quarter results and possibly more store closings. In the past year, Sears has closed nearly 100 stores in the United States. John Kernan, an analyst with Cowen, said, “They have too many stores and they’re losing a lot of money, burning cash.” The company is now reportedly contemplating selling off its 51% stake in Sears Canada, which operates nearly 20% of the company’s stores worldwide.

Once the nation’s largest retailer and biggest employer, Sears reshaped shopping in the United States. However, its merger with Kmart appears to have been a disaster from the beginning. Since merging with Kmart in 2005, Sears has seen a continuous downward spiral in business as sales have declined every year. The company has been losing money since 2011.

CEO Edward Lampert reportedly told shareholders at this month’s annual meeting that “closing stores are going to be part of our future. The world has shifted.” The company won’t comment on store closings, but a company spokesman did not dispute that quote. Recently, the company spun off its Lands’ End unit. Two years ago, it sold a line of specialty stores, Sears Hometown and Outlet Stores

Today, competitors like Home Depot, Wal-Mart Stores, Target and Amazon are chipping away at Sears’ remaining market share. Sears is investing very little in its retail space compared to competitors and is suffering from that lack of investment. Allan Ellinger, co-founder of retail investment bank MMG, said, “It’s evident that Lampert’s been putting Sears Holdings through a slow, orderly liquidation. Every other retailer is investing in the business. This guy is doing nothing.”

Over the next few years, Kernan expects the company to close 500 of its 1,980 U.S. stores. Kernan commented, “The lights are going off at Sears and Kmart. There are tumbleweeds blowing through the parking lots at Kmart. They’re basically completely irrelevant.” Brian Sozzi, CEO of Belus Capital Advisors, also expects Sears to close more stores quietly without fanfare. Sozzi said, “If they come out and say they are closing hundreds of stores, their stock would plunge and the cost of borrowing would shoot up.”