“While the company’s plans have demonstrated early successes, notably in same-store sales, the ability of the company to continue as a going concern is dependent on the company’s ability to obtain additional sources of liquidity in order to implement its business plan,” said a statement by Sears Canada (SCC.T) execs Tuesday, as the company share price dove 22% on bad financial news.
Here’s a tip: Nobody’s giving you more money so you can drag this out, Sears.
Hot off the crazy innovative move of updating their logo with a maple leaf, the bewildered retail execs at one of Canada’s oldest retail institutions have finally fessed up that they don’t know how they’re going to get themselves out of this jam that has been going for about fifteen years now.
The jam in question? Not seeing Amazon coming at any point over the last two decades and expecting grandmas would keep doing what they did in the 70’s whenever they needed a toaster oven.
You can almost imagine the conversation happening among the leather and mahogany desks and recliners at Sears HQ.
Oldie McSeniorface: It’s called the innernets. Apparently it has cat videos. They say we should pay attention to them.
Dandruff O’Billionaire III: It’ll never catch on. People want to take transit downtown and look for their sizes on racks that only have size 0 and 2. It helps their self esteem. Always has.
Cankersores Analgesic Sr.: Does this innernets have catalogues? People love catalogues! I bought the family Oldsmobile with a catalogue in ’58. Ran like a dream. Bugger to park it downtown these days.
Toady J. Bankerslamp: We should open some more stores. That always works.
Retail is DEAD. Retail is hate. Going into a store and paying high prices to subsidize corporate HQ, and picking through shelves with limited selection, and having to cart the whole load home after lining up at a checkout manned by a minimum wage galley slave, is the worst experience one can have that doesn’t involve a doctor’s check-up and the word ‘yeast.’
I mean, just in the last week, I received six Amazon deliveries. SIX. One of them showed up on a Sunday morning, delivered at no cost, brought to the door by two guys with a nice truck. You know what it was? Two rolls of painting tape. THEY DELIVERED TWO ROLLS OF PAINTING TAPE ON A SUNDAY FOR FREE.
Amazon lost money on that arrangement, for sure, but Amazon is the honey badger of retail; It doesn’t give a shit, because after they lost money on the Sunday painter’s tape, they made money from the two grand’s worth of other things I bought from Amazon during that week, that previously I would have gone to electronic stores, photography stores, hardware stores, and music stores to get. I’ve bought all my clothes online for the past year, several pairs of shoes, ongoing software subscriptions, new plates, a new stove – all of it online.
And I’m a small business fan. I WANT to engage with small businesses that offer better service or a better variety or helpful advice or longer hours… but Sears doesn’t do any of that.
On their website just now, I looked to see how they compare to Amazon and here’s what I found:
Basically, you can either give them your email address for ten bucks, or shop for ‘intimates.’
If you look deeper, there’s electronics and the like hanging about, but clearly the bra shots get a lot more page views so that’s what they’re pushing.
Of course, if you dig in and look at their ‘lingerie’ section, there’s eight garments. No, really – eight. Their entire lingerie section (don’t ask why I looked, I did it for science) has eight pieces.
Here’s some bras because, shrug, don’t you judge me.
Notice anything similar there? SELECTION!
There’s got to be more to this turnaround plan, right? I mean, it’s a massive company with bright people thinking hard about how they can radically turn… nope.
CULTURE OF WOW
Reinvention requires constant change and we, at Sears Canada, are making significant changes to our company. We are reinventing from the ground up. Literally. Brick by brick. Byte by byte. As Sears Canada reinvents its brand, its product and its stores, it is also reinventing its culture. We are reinventing our customer experience to WOW each and every customer across all our touch points and that can’t happen without reinventing our culture.
The Culture of WOW powered by H2H (human to human) is our operating DNA; it’s how we work together, and how we serve our customers. Welcome to the WOW Movement.
Sure, Sears has history, being as it’s been open in the US since 1886, and in Canada since the 1950’s.
You know what else has history? Hitler. And would you invest in Hitler?
Okay, that might be taking it a bit far, but come on, this grand plan of Sears to turn itself around in Canada was announced in 2011. What did it consist of? Adding a maple leaf to the logo, talking about culture a bunch, and selling off the real estate its stores were located in.
Imagine if you had a bunch of mortgage debt, so decided to sell off the bedrooms in your home to pay for it, agreeing to pay rent on those rooms going forward. That’s the grand plan Sears put forth.
Actually, there was more than that, but it was the sort of mealy-mouthed marketing department bullshit that doesn’t change anything for the individual who walks in the door, and reinforces the party line at HQ that we’re ‘doing everything possible’.
Like this ridiculousness, from April of this year, when the company decided to do a ‘pop-up store‘.
“We used to have 64 private-label brands in this store,” said Brandon Stranzl, executive chairman, Sears Canada. “Each label didn’t really have a clear positioning or unique selling proposition. So we said, ‘Look, let’s consolidate all of our private brands into one unique selling proposition and one positioning statement for consumers.’ So if it has a Sears label on it, it means this is an amazing quality product from the very best factories in the world.”
What bullshit.
Ryan Seacrest: Hey Charlize Theron, you’re nominated for six awards tonight. What are you wearing on the red carpet tonight?
Charlize Theron: Why Ryan, I’m wearing Sears. If it has the Sears label, it means this is an amazing quality product from the very best factories in the world.
Ryan Seacrest: Does it though?
Charlize Theron: …Discount rack. They had my size. I was in a hurry.
Then there’s this: Sears Initium.
This video was posted a few months back, when Sears was still going bankrupt but wanted to make it appear to a money lender that they were kicking it new school by putting kids with laptops in brick buildings. With cellphones. And whiteboards.
You know what Sears Canada has been great at in all of this time? Turning over CEOs.
“The problem with Sears isn’t the merchandise displays — it’s the ownership,” said Toronto retail consultant Ed Strapagiel to the Financial Post earlier this year. He also said the company’s largest shareholder, American venture capitalist Edward Lampert, was the real problem.
“[The company] is not going to put the money into fixing up Sears Canada in a meaningful way. Sears Canada has had lots of chances and plenty of talent in the C-suite that should have been able to do something by now. They all come in with high hopes and great plans, and then leave.”
Let’s go through some of those:
CEO Calvin McDonald: June 2011-September 2013
CEO Douglas C. Campbell: September 2013-September 2014
CEO Ronald Boire: October 2014-August 2015
President Carrie Kirkman: August 2015-July 2016
You know who the CEO is these days? NOBODY. There’s literally no CEO.
The latest entry to this mess in the C-suite is Executive Chairman Brandon Stranzl, who is the designated puppykiller for US hedge fund Edward Lampert, which owns almost half of the company and would need to put its hand in its pockets to really turn the ship around.
What appears to be more their style is to pull PR stunts off that make it look like the wheels are turning behind all that fog and smoke and mirrors.
Here he is being talked up in the Globe and Mail earlier this year:
“Most retailers function with a set of stores and a website attached,” Mr. Stranzl, sporting a fashionable stubble of a beard, said as he sat in the kitchen of Initium while young jeans-clad employees wandered in and out. “We’re going to make Sears into an e-commerce company with a set of stores attached.”
Be fucked you are, you hedge fund-leashed hipster doofus.
Here are some of his bright ideas:
Mr. Stranzl is scaling back the number of products Sears offers and physical stores it runs to focus on its best bets, while building up its e-commerce.
Don’t you all want less options?
Other re-engineering initiatives include placing products in stores in what he dubs a “pinball” strategy. Similar to IKEA, Sears is putting benches, racks and mannequins in a maze-like formation to force shoppers to browse through displays rather than speed through racks in straight rows.
A worse shopping experience! Thanks Brandon.
Today, Brandon’s big hipster rebranding was dealt a death blow, with financial results showing not just massive losses, but ongoing massive losses, and building losses at that, as well as the revelation that expected debt financing has not materialized. Because WHY WOULD YOU PUT MONEY IN THIS DUMPSTER FIRE WITH A MAPLE LEAF ON THE SIDE?
“The company continues to face a very challenging environment with recurring operating losses and negative cash flows from operating activities in the last five fiscal years, with net losses beginning in 2014,” Sears Canada (TSX:SCC) said in a statement.
But, Initium! Kids in blue jeans in the kitchen! Closeups of cellphones with catchy music! Revamping pivotry! Foosball tables! Bring your dog to work day! IT HAS TO WORK!
Sears Canada’s announcement came as it reported a first-quarter loss of $144.4 million, more than double what it was a year ago. Its revenue slipped by about $90 million to $505.5 million, a decline of 15.2 per cent.
The company said it had expected to be able to borrow $175 million for additional liquidity, but that has been reduced to about $109 million. It said it also lacks other assets, such as real estate, that can be monetized in a timely manner.
Why would it lack real estate oh yeah it already sold it all of course duh.
The entire folly of Sears Canada can be summed up adequately in one paragraph, from today’s Calgary Herald:
Still, Sears Canada maintained some positivity about its outlook, pointing to a 2.9 per cent increase in same-store sales, a key metric in retail that measures sales at locations open for at least a year. That came, however, as the number of its stores dropped.
Ya think maybe those two things are linked?
Ya think?
We don’t usually suggest things like ‘buy’ and ‘sell’ at Equity.Guru, but Christ on a bike: Short SCC.T and whistle happily while you do it.
And send scorn to this guy at Seeking Alpha, which Sears Canada included on the media section of its website because it never gets any positive press, and who looks like an utter dimwit in view of today’s numbers:
In looking at its financials compared to a year ago, Sears Canada is in worse shape today than yesteryear. Its cash position has dwindled, and the company has leveraged itself up significantly. […] I wouldn’t buy a company that doesn’t have a plan. Sears Canada does and its strategy is enough to convince me that they know what they are doing. This is a stock that will take time to bounce back. At this price, it is worth buying into.
— Chris Parry