Why major US department store Sears is “beyond repair”, according to one analyst

US department store mega-chain Sears has been labelled as “beyond repair” by a leading analyst, who believes the business’ near US$2 billion ($2.64 billion) loss over 2016 is to blame.

Inside Retail reports, Neil Saunders, managing director of GlobalData Retail, told his clients in a note this week that Sears’ combined US$717 million ($947 million) loss in the last quarter, and its US$539 million ($712 million) in the same quarter the year before, spells doom for the massive retailer.

Founded in 1886, the 130-year-old Sears chain sells products across a vast range of sectors, including home appliances, jewellery, tools, and toys.

It’s parent company, Sears Holdings, also owns Kmart in the US.

“Not only do these staggering figures fail to show even the faintest glimmer of improvement, but they are also a clear symptom of a business that is broken and now well beyond repair,” Saunders wrote to his clients.

“Much of the dip is also attributable to a slump in the number of shoppers visiting Sears and Kmart, and a continued deterioration in conversion rates among those that do.”

“Not only are sales down, but the pace of decline has accelerated sharply.”

Saunders believes Sears is failing to provide what customers want, and claims its “product mix, its store environments, its customer service, and its general approach to retailing are actively deterring consumers from visiting”.

Citing the “pressured and competitive retail environment” in the US, Saunders believes these issues will eventually be Sears’ downfall.

“Where Sears sees a path, we see a tangle of extremely dense vegetation through which it is near-impossible to navigate,” he said.

The US isn’t the only country where retailers are heightened competition, with local retailers also preparing for more big-name international retailers to touch down in Australia over coming months.

Earlier this month, retailers TK Maxx and JD Sports confirmed their Australian arrival plans, while German retail giant Kaufland is also on the way.

Retail experts say Australia is a “strong market” for global retailers, and this trend is set to continue.

“In the next three to five years, the vast majority of the top 100 retailers will have a bricks-and-mortar presence in Australia,” retail expert Brian Walker told SmartCompany last month.

“Retailers have to focus on their operating strategy and carefully consider their uniqueness. You have to have a point of difference.”

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