At North Hollywood Sears, news of iconic chain’s bleak future is no surprise

1 Los Angeles

Los Angeles News & Search

1 News - 1 eMovies - 1 eMusic - 1 eBooks - 1 Search

Outside the Sears in North Hollywood, David Lachina put his shopping bag in his car and shook his head.

“I grew up looking through the wish books, got my bike at Sears,“ the 55-year-old North Hollywood resident said. “I’d hate it (if Sears closed).”

Once an American retail mainstay, Sears dropped a bombshell on investors Tuesday evening when it said in a regulatory filing that there is “substantial doubt” it will be able to keep its doors open.

Company shares, which hit an all-time low last month, tumbled more than 12 percent.

According to the filing, Sears Holdings Corp. lost more than $2 billion in 2016. Adjusted for one-time charges, its loss was $887 million.

The struggling retailer has been selling assets, most recently its Craftsman tool brand. But it says its pension agreements may prevent the spinoff of more businesses, potentially leading to a shortfall in funding.

“Our historical operating results indicate substantial doubt exists related to the company’s ability to continue as a going concern,” Sears said in a filing with the Securities and Exchange Commission.

RELATED STORY: Why the Sears in North Hollywood is thriving despite parent company’s woes

The bleak news comes on the heels of a January announcement the company would close 150 of its Sears and Kmart locations.

Customer Lachina said he saw the writing on the wall when Sears sold the Craftsman brand.

“It just keeps holding on and holding on, but it needs a refresher,” he said.

The Valley Plaza location seems to be getting one. On Wednesday the floors had been pulled up and crews were working on the store’s interior. Signs said the location is undergoing a remodel and lines at the cash registers gave no indication of the woes the chain is reporting nationally.

Local manager Tom Kennedy referred requests for comment to the corporate office Wednesday, but in December he told the Daily News, “This store is a very successful store for Sears. We are very busy and very profitable.”

Outside the building, store employees declined to comment on whether they were worried about their jobs. In an emailed response, Sears Holdings Corp.’s director of corporate communications, Howard Riefs, would not directly comment on the store’s future.

“We have not announced any additional store closures,” he wrote.


RELATED STORY: How Sears, JCPenney fight to survive in the mall

Industry analysts say the storied retailer might have reached the point of no return.

“I’m not surprised to hear it, but I am surprised that they are doing it as publicly as they are,” said Phil Lempert, a Santa Monica-based expert on consumer behavior and marketing trends. “I’m sure this is something they’ve probably talked about for a number of months, or even years.”

Lempert said Sears lost its way about 20 years ago when the company decided it wanted to be a department store as opposed to “Sears.” And there is, he said, a difference.

“Sears was known for its tools and appliances, not for fashion,” Lempert explained.

That disconnect landed Sears in a retail no-man’s land. Meanwhile, megahome improvement chains such as Lowe’s and Home Depot have plucked many of Sears’ customers.

A blog post from the company’s chief financial officer tries to temper the bleak headlines stemming from the SEC filing. In the post, Jason Hollar details steps the retailer is taking to stay competitive, including the Craftsman sale for a “net present value of over $900 million in cash” and a restructuring plan that Hollar said will “deliver at least $1.0 billion in annualized cost savings.” Still, it might take a lot to win some customers back.

RELATED STORY: Macy’s in North Hollywood closes its doors, marking end of Laurel Plaza

North Hollywood father of two, Steve Sobel, uses the store as a shortcut when he’s walking but said he rarely, if ever, goes inside.

“You just don’t think about going to Sears anymore,” he said, even as he noted seeing items in the store that he’d bought elsewhere for higher prices, “You grew up going to Sears; it was a part of your life, but they just weren’t able to keep up.”

He’s among those who say the North Hollywood store’s days might be numbered, for factors beyond its own financial performance. Sobel noted a wave of gentrification is moving through NoHo. In October the Macy’s at Laurel Plaza on Oxnard Street and Laurel Canyon Boulevard closed, making way for a planned entertainment, retail and residential development.

Still, Los Angeles City Councilman Paul Krekorian, whose district includes North Hollywood, said in a statement, he hopes the NoHo Sears will remain open.

“It’s a very good store that has always been popular and beneficial to the neighborhood,” he said. “What is truly needed here is more economic activity to help revitalize the whole commercial corridor. That’s something I have prioritized since becoming a council member, and it is starting to come to fruition.”

Staff writers Kevin Smith, Hannah Madans and Nancy Luna contributed to this report.

1 Los Angeles

Los Angeles News & Search

1 News - 1 eMovies - 1 eMusic - 1 eBooks - 1 Search

Leave a Reply