Sears, The Retailer That Once Was

Implications: 1. Sears retailing operations continue to flounder.

2. Profits are generated through various financial engineering schemes.

3. What will the future Sears looks like?

Analysis: It was not too long ago where Sears was the largest retailer in the US, followed closely by K Mart. Today Sears and K Mart are one of the same and controlled by a non retailer, Eddie Lambert.

The latest quarter showed that more than half their profits were the result of trading in "exotic" derivatives. The retail part of the business continues to erode, with store for store sales decreasing. From a retail standpoint, the company no longer has the quality and quantity of top notch retail talent to run a successful retail chain. So what will the future Sears look like?

If successful, Sears, will end up being a holding company, not too dissimilar to Berkshire Hathaway, with the cash flow being used to acquire other companies in a variety of industries. The retail operation will continue to shrink and eventually go away and be replaced by these acquired businesses.

If this strategy is unsuccessful, Sears will end up in the grave yard, not too much differently than its once arch rival, Montgomery Ward.

In either event, the Sears of the past will no longer be the Sears of the future.