Please ensure Javascript is enabled for purposes of website accessibility

Sears Is Out of Fashion

By Rich Duprey - Apr 11, 2013 at 10:42PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

New fashion business unit won't stop slide in sales.

If Kim Kardashian couldn't help Sears Holdings (SHLDQ) turn its retail operations around, what makes it think singer Adam Levine, or rapper-turned-American Idol judge Nikki Minaj, will do any better? The diminished stature of the once-venerable retailer is simply taken down yet another notch as it slaps a new pop icon face across its banner.

Sears is developing a new business unit called Shop Your Way Brands that focuses on entertainment-driven fashion and lifestyle brands, and the Levine-Minaj tag team duo represent the first two also-rans to populate the stage. I'm just not sure the "authentic personal style of iconic artists" is exactly what the typical Sears shopper is looking for.

Levine's t-shirt and jeans might carry over, but exactly how that differentiates what Sears offers from the clothes found at Target and Wal-Mart is beyond me. And the big curves of Minaj seems to have already been tried with the Karadashian line, though perhaps the pink hair might be a new draw.

It's easy to understand why Sears might want to hitch its wagon to celebrities, as revenues at the retailer continue to ebb away, dropping more than 4% in 2012, and down 25% since 2007, the last year it recorded a gain. The ShopYourWay social shopping experience drove over half of its revenues at Sears and Kmart in the fourth quarter and for all of last year. But its half of a quickly dwindling pie. In contrast, Wal-Mart sales grew 4% in the fourth quarter, to $127 billion while Target's sales were almost 7% higher, and neither had to rely upon pop stars to achieve the growth.

It's true that every retailer has a stable of personalities it relies upon, though more often than not, they're related to true fashion designers rather than the latest popular reality TV star. But Sears is making an art form out of trying any new shtick to see if it can reverse course and, by this point, you'd think it would realize it's making some horrible choices.

At this point, I'd be willing to bet J.C. Penney has a better shot at making a viable comeback than does Sears. Perhaps it was done tongue-in-cheek, but a blog yesterday speculated about the chances of Sears buying out Penney, though it concluded adding yet another wounded retailer to its mix of dying brands would probably not serve anyone's interests.

From Christmas in July to being your quick cash-for-gold broker,  financial gimmicks like total return swaps to calving off divisions like Orchard Supply and Sears Hometown, the retailer has thrown a lot at the wall over the years to try and return value to shareholders, but hardly anything has worked.

Despite what it heralds as a new entertainment-driven fashion business, Sears isn't singing any new tune that shoppers -- or investors, for that matter -- are likely to want to hear.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Sears Holdings Corporation Stock Quote
Sears Holdings Corporation
SHLDQ

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning service.

Stock Advisor Returns
331%
 
S&P 500 Returns
115%

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 05/20/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.