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A Few Reasons Why Investors Should Keep Sears on the Watch List

June 25, 2014 | About:

Sears Holdings (NASDAQ:SHLD) has disappointed its shareholders with the spin-off of Land’s End, which was a cash cow for the company. At a time when Sears is reporting huge losses, Lands’ End had saved the day with decent profits. But now, things are getting worse for the company.

Tough times

Sears has been witnessing tough times as the shopping habits of its customers are changing. Due to a change in customers' shopping habits, store traffic has reduced considerably, and perhaps shifted pricing power away from malls and big retailers. Today, shoppers figure out what they want online, and will purchase only from that retailer which offers the best price.

Statistics shows that in 2007, shoppers visited average five stores per mall trip, while today the number has reduced to three. In addition, online stores offer deep discounts, which have further crippled Sears, as some shoppers come only when they can cherry-pick discounted items. But sears have been preparing it self for times like these.

Turnaround moves

The company has prepared five strategic pillars to support its growth. First, it is creating lasting relationships with members by empowering them to manage their lives. Second, to attain best-in-class productivity and efficiency; third is to build its brands; fourth is reinventing the company continuously through technology and innovation; and lastly, reinforcing the Sears Holding Corporation way by living to its values every day.

Sears is making substantial investments in its member-based platforms namely Shop Your Way and Integrated Retail by engaging members with personalized, relevant content and offering more capabilities to its members. Sears is also enhancing its financial flexibility by reconfiguring its asset base to redeploy capital, while meeting its financial obligations.

The company has been focusing on five important strategies that will act as the key driver to its growth. To start with, Sears is investing in various capabilities, which will enable its members to access the widest possible assortment of products and services. Secondly, it will analyze the data on member trends to deliver targeted offers and decisions in time. The company is shifting on its decision making process from mere gut feeling to a more analytical approach.

Thirdly, it will expand through Sears’ market place that will allow third-party merchants to advertise or sell their products on the Sears websites. Currently these websites offers over 100 million items along with multiple delivery options. Fourthly it will enhance its Shop Your Way membership benefits by giving providing its members with more benefits. Finally to develop digital and social relationships with its members as the company aspire to do more than simply transact.

Positive vibes

According to management, “Sears Holdings is uniquely positioned to win in the world of Integrated Retail.” The integrated channel includes the best of various channels, broad product selection, ability to touch and feel the product, and access from anywhere through mobile applications. Notably, all these capabilities are prominent through its Shop Your Way platform. This will provide its members with more convenient shopping. The company is also investing in online channels, which will further help its customers.


Looking forward, Sears' woes are not over and the company is still sailing through troubled waters. Considering all the above factors, it will be prudent for investors to avoid this stock, as it is expected to fall more. But they should keep it on their watch list as it is making good efforts to improve the business.

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GuruFocus has detected 4 Warning Signs with Sears Holdings Corp $SHLD.
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