All Retailers Screwed Sears Chairman
The retail industry is undergoing a period of tremendous change, and no company is immune, according to Sears Chairman Eddie Lampert. In a letter to shareholders on Thursday, Lampert said the impact of “tectonic shifts” in consumer spending has spread more broadly in the last year to retailers “that had previously proven to be relatively immune to such shifts.”
“Walmart, Nordstrom, Macy’s, Staples, Whole Foods and many others have felt the impact of disruptive changes from online competition and new business models,” Lampert wrote.
Walmart is expecting flat sales this year and announced last month that it would close 269 stores, including all 102 of the company’s smallest-format stores, called Walmart Express.
Macy’s, Staples, Nordstrom, and Whole Foods are also all suffering from weak or declining sales and closing stores to cut costs while investing more in ecommerce.
Retailers with big physical footprints have been hit the hardest by the shifts in the retail industry, according to Lampert. “Companies like Amazon were able to grow rapidly without having to collect sales tax, while traditional retail companies had the dual disadvantages of having to report profits and to collect sales tax from their customers,” he wrote. “The consequence? We are now seeing more and more retail stores shut down and the tax base of many municipalities eroding due to the hollowing out of the sales tax base as the Wall Street Journal recently reported. Even the largest and most successful retailers, like Walmart, are shuttering stores all over the world.”
Lampert also noted that department stores and apparel retailers have been hit hard by an unseasonably warm winter that has led to declines in sales of winter apparel.
“The weather conditions had a cascading effect on many retailers, leading to reduced spending and heavy discounting on winter clothing and related items,” Lampert wrote. “Reports from other department store companies such as Macy’s, Kohl’s and Nordstrom and specialty apparel retailers such as Ralph Lauren, Gap and J. Crew highlighted the difficult environment for apparel retail in the fourth quarter of 2015.”
Lampert says Sears is trying to adapt to the evolving industry, and acknowledged that the company is falling behind the pace of change.
Sears said Thursday that its same-store sales fell 7.1% in the fourth quarter and revenue dropped 9.8% to $7.3 billion. The company lost $580 million, or $5.44 per share, in the quarter compared with a loss of $159 million, or $1.50 a share, for the same period last year.
“It’s clear that we need to accelerate our efforts,” he wrote. “We will have to think, work and move harder and faster. This won’t be easy, but the pace of change in the world we’re working in is constantly increasing.”