Competitors taking share
Sears Holdings Corporation (NASDAQ:SHLD) lost a lot of customers to a number of companies including Amazon.com, Inc. (NASDAQ:AMZN), Wal-Mart Stores, Inc. (NYSE:WMT), The Home Depot, Inc. (NYSE:HD) and Costco Wholesale Corporation (NASDAQ:COST). Amazon has been pretty dominant when it comes to online shopping. In the last three years, the company was able to grow its revenues from $24 billion to $61 billion and its revenues are expected to pass $100 billion within a couple years. Outside of the online shopping, Wal-Mart and Costco are fighting to gain market share in consumers who do all their shopping, from groceries to clothing, under the same roof. The Home Depot, Inc. (NYSE:HD) has been increasing its presence in home appliance sales, where Sears used to be pretty strong in the past. These companies are not only damaging the business of Sears, but they are also destroying many local businesses that dare to stand in their path. Combined, Costco Wholesale Corporation (NASDAQ:COST) and Wal-Mart Stores, Inc. (NYSE:WMT) generate $570 billion in annual revenues, which means that they are taking a bigger chunk of the consumer pie each year. Sears Holdings Corporation (NASDAQ:SHLD) will have to work really hard to catch up to these players. Keep in mind that conservative investors would rank these companies like this: Wal-Mart Stores, Inc. (NYSE:WMT) (because it has stable revenues, highly diversified and successful business, dominance in many markets, high profit margins, and a dividend yield of 2.45%), Costco Wholesale Corporation (NASDAQ:COST) (growing business, high customer loyalty, decent profit margins, and a dividend yield of 1.10%), The Home Depot, Inc. (NYSE:HD) (focused on one industry, decent rate of revenue growth, stable profit margins, dividend yield of 1.97%), Amazon.com, Inc. (NASDAQ:AMZN) (strong revenue growth, high customer loyalty, dominance in the internet market, unpredictable profit margins, no dividends, high P/E ratio), Sears (high uncertainty, declining sales, declining revenues).
What can Sears do?
First, Sears Holdings Corporation (NASDAQ:SHLD) will have to close down all the non-performing stores. Second, the company will have to focus more of its resources on stores that are performing better. Third, the company will have to run aggressive campaigns (such as advertisements and discounts) to lure more consumers in its stores. Fourth, it will have to increase its online sales and start forming partnerships with more brands to increase the variety of products in its stores. If everything works according to the plan, the company may be saved. If anything goes wrong, the chances of survival will fall for Sears.
At this point, Sears Holdings Corporation (NASDAQ:SHLD) is a speculative play. I would mostly stay away from this company at this point.
The article Is Sears Beyond Help? originally appeared on Fool.com.
Jacob is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.
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