Sears Still Struggling

Those of you reading this site for awhile know that I have criticized Sears repeatedly for selling their credit division. Wal-Mart and the Internet have made retailing a very tough game. Sears can't compete on low prices, so they have to find a way to differentiate themselves the way Best Buy and Target have. The problem is that Sears hasn't yet done that, and I don't see any good opportunities for them to do so. They used to be the appliance place, but not anymore.

Anyway, here is more on their latest business moves.

For all this moving about of the deck chairs, Sears' business has yet to show much measurable improvement. Yes, Wednesday the company said that August sales were tracking better than expected. But all it expected was for sales to be flat. In July, sales fell by 0.8 percent. Wal-Mart, in contrast, saw sales gain 4.6 percent. Sears has seen same-store sales decline every month this year.

Investors appear to believe in the turn-around story, however — Sears shares are up 79 percent this year, versus a 17 percent gain for Wal-Mart.

The problem is that retail turnarounds are very hard to pull off, particularly for outfits as large as Sears. When it comes down to it, retailing is a zero-sum game — you can only sell so much — with winners and losers. So far, Sears still seems to be on the losing side of the equation.

I think those investors bidding up the stock are going to get burned.