I think it is fairly safe to say that the retail transformation of Sears Holdings (NASDAQ:SHLD) is failing and that it would take a miracle to reverse its trajectory at this point. The comparable store sales decline worsened in 2015, resulting in greater declines than 2008. The cost cutting hasn’t been able to keep up with the sales decline, resulting in adjusted EBITDA that was worse in 2015 than in 2014, which was already worse than in 2013. It is probable that Eddie Lampert would have been fired as CEO of Sears long ago if he wasn’t the main owner.
Comparable Store Sales Decline Greater Than 2008
The retail transformation at Sears appears to be going as well as Ron Johnson’s attempt to transform J. C. Penney. Comparable store sales at Sears Domestic and Kmart fell -11.1% and -7.3% respectively in 2015, continuing a near-uninterrupted string of declines (broken only by slightly positive comps at Kmart in 2010). Remarkably, the attempts to transform Sears have resulted in worse comps in 2015 than it did during the 2008 recession.
This post was published at David Stockmans Contra Corner on March 17, 2016.
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