Will other US retailers profit from the pains of Sears

Will other US retailers profit from the pains of Sears

Sears Holdings is shrinking. So are opportunities for its rivals to pick off the struggling retailers customers.

Sears on May 26, 2016 reported that sales fell 8.3 % in its first quarter ended April 30 from a year earlier. It was just the latest in a long string of sales declines for Sears. But at least this time Sears had plenty of company.

Target, J.C. Penney and Macy’s were among the retailers reporting first-quarter sales drops in what has proven a horrid earnings season for retailers. The combined effects of e-commerce’s escalating share gains, declining selling prices and consumers’ shift toward buying services over stuff is hurting.

For many retailers, it does not help that Sears simply doesn’t have as much market share to lose to them as it once did. Sears’s total first-quarter sales came to USD 5.39 billion. That was USD 488 million below what it earned a year earlier.

In contrast, the company’s first quarter results last year were down USD 1.08 billion on the year, excluding the effects of the 2014 deconsolidation of Sears Canada and spinoff of Lands’ End. So this time around, other retailers had about USD 600 million less in lost Sears sales to pick over.

Sears is considering increasing the availability of its Kenmore appliances, Craftsman tools and DieHard batteries away from its stores as a way to stanch its revenue losses. But even if its sales keep dropping, it doesn’t have nearly as much market share to give up as it did a decade ago, when its sales were double what they are now.

So the weak retail hand doesn’t help peers feel stronger. And for those other retailers, that makes the headwinds even tougher.

www.wsj.com


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