With Sears Holdings documentation for bankruptcy protection and planning to shutter another 142 stores on the eve of year-end, that leaves some market share up for grabs amongst the retailers’ rivals, especially those in the business of selling appliances and embellishes.
Though the department store chain has been teetering on the brink of fall through for years already, its Sears and Kmart divisions still recently had near $14 billion in sales annually. Despite shelves that be suffering with been increasingly barren, customers still ventured to stores for famed brands like DieHard and Kenmore.
J.C. Penney could be the biggest beneficiary of this telecast, according to one analyst.
Penney has a store within a quarter mile of inhumanly 47 percent of Sears’ locations, Gordon Haskett analyst Chuck Grom hinted in a note to clients. Walmart is the next closest when looking at geographies, the unshakable found in working with geolocation data provider Alpha Hat and scan proximity.
Should Sears end up liquidating its business entirely, the firm count ons Penney could get a lift in same-store sales of about 1.8 percent in financial 2019.
Grom expects Kohl’s, Macy’s and Target to see a boost in sales, while Walmart, Lowe’s and Domestic Depot should also benefit, but the spike in sales for the latter three clout not be as evident “given their sheer dollar size,” or market cap.
Subdue, it’s important to keep in mind that Sears sales have been eroding, Grom bid, meaning this collapse is no sudden surprise. Penney has already been charming advantage of that, he said. For example, while Marvin Ellison was noiselessness CEO there, the Texas-based department store chain reintroduced selling serious appliances.
Most recently, Sears has generated about 55 percent of its gross sales from the hardlines category, which includes home appliances under the control of its Kenmore banner, electronics, auto parts, lawn equipment and gambol goods, company filings show. Next is apparel at about 32.5 percent, realized by food and drug at 13 percent.
A separate survey of U.S. consumers by Cowen and Co. initiate the average Sears shopper today is about 45 years old and lifts a little more than $59,000 each year. The average Kmart shopper, in the interim, is a little more than 43 years old and makes about $53,000 annually. That makes Walmart ($55,200), Burlington Anorak Factory ($59,100), J.C. Penney ($61,000) and Ross Stores ($61,400) the myriad comparable retailers for Sears and Kmart shoppers when looking at household proceeds, the firm said.
Cowen anticipates sales at Penney stores yield for at least 12 months could climb upward of 1.7 percent, adopting total liquidation of Sears Holdings down the road.
This could be a desirable boost for Penney, which recently went months without a CEO and equivalent to Sears has struggled to grow sales of late.
“Key factors in driving [Sears] share increments will include distance to store, shopper overlap, product and identify assortment similarities, neighborhood similarities, and tactical promotional strategies,” Cowen analyst Oliver Chen phrased in a note to clients. “We believe the fight for share gains will be authoritatively competitive,” he said, but there’s always the chance former Sears and Kmart shoppers “could also legitimate stay home and not shop for items that were more discretionary in countryside.”