Sears Is Not A Retail Story, It's A Holding Company Holding A Fire Sale

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(Image credit: Getty Images via @daylife)

It may be time to simply face the hard truth that journalists, analysts and shoppers have got Sears all wrong. This isn’t a retailer, not anymore. Technically, it has stores and sells merchandise in the billions of dollars. But those sales have have been declining for a decade as have assets.

Sears has been closing stores and now looks to spin off more parts of its business. Stores are old and often untended, brand equity in flagship private labels is languishing and management has all but given up on finding a leader with real retail and merchandising expertise.

Sears isn’t really a retail company anymore. In fact, we should feel a little silly for even thinking of it that way. Since hedge fund manager Eddie Lampert took control of Sears and merged it with Kmart to form Sears Holdings SHLD +4.64% in 2003, the company has become little more than way for Lampert to create equity for shareholders like himself. Lampert holds close to 60% of Sears Holding’s outstanding shares, and turning assets into cash benefits him directly. It doesn’t  build a better retailer.

There have been halfhearted attempts to add merchandise, mainly apparel brands from celebrities such as the Kardashian’s, Adam Levine and Sophia Vergara (for Kmart). Not all stores are stocked with the merchandise and the partnerships in many ways seem designed to get headlines and drive traffic to the Web site. Online is where Lampert and Co. have focused much attention. Building a marketplace meant to rival Amazon, with multiple sellers and storefronts. A nice strategy, but not one that reflects the company’s retail nameplates of Sears and Kmart. “The mission for any company, including (Sears Holdings) is to generate returns, not to be a retailer for the sake of it,” tweeted one follower of the topic in response to this story about Sears looking to sell Lands End.

@lfheller @Forbes Laura, the mission for any company, including $SHLD, is to generate returns, not to be a retailer for the sake of it.

— David DeMateis (@CorpWarriorIL) October 30, 2013

But corporations do fall into categories and are evaluated by the parameters of the industries in which they operate. Evaluating Sears by the rules of retail yields some pretty dire conclusions. As a retailer, Sears is pretty much done. All that’s left is to ravage the bones. Or, as Lampert is doing, sell off the parts.Gone are Sears Hometown and Outlet stores. Gone is nearly half its ownership in Sears Canada with four more locations sold, including a flagship store in Toronto. Gone, soon, may be Lands End and Sears Auto Centers.

There hasn’t been an investment in Sears for years and stores are sad. But stores don’t matter to an investor that seeks returns in other ways. Lampert can’t just come out and say this is not a retail story. That won’t get him anything but reduced asset value. But it may be time to face facts — Sears is not a retail story. It’s a holding company holding a fire sale.