Sears Wants to Cut Its Way to Profitability

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There is an old saying in business: “You cannot cut your way to profitability.” The recent plan for Sears to survive is based on just that. Growth is not important.

The proposed store closures total 188. This would leave Sears with 599 stores. It has told the bankruptcy court that about 400 stores make money. For some reason, Sears does not want to cut down to that level. Perhaps the company believes some magic will make the surviving stores become viable. The only way that can happen is if same-store sales rise. The lack of improvement in that metric has been what killed the owner of the Kmart and Sears chains.

It is easy to say why Sears cannot survive even with a better financial foundation. The Sears and Kmart brands are nearly dead. No matter how many stores the company has, it cannot compete with the likes of Walmart, Target and even desperate J.C. Penney. In addition to that, there is an army of smaller store challengers that want a part of the Sears and Kmart sales.

Of course, Sears cannot compete with Amazon.com online.

The Sears plan to keep stores open buys it time, but not survival. The horde of competition has more locations, larger marketing budgets, newer or refurbished stores and balance sheets that will allow them to survive a modest holiday season.

Sears is already dead. In bankruptcy court, some won’t believe it.