Forget how Wal-Mart (WMT) is doing. Sears (SHLD) is the real face of retail. Between its Sears and K-Mart stores, it has 3,000 outlets and 330,000 employees. And, it is dying a quick death.

For the quarter ending the retailer had a a net loss of $146 million, or $1.16 per share, compared with net income of $4 million, or $0.03 per share, in the prior year. Revenue declined approximately $0.9 billion to $10.7 billion. Same-store sales were off almost 9%.

For reasons that will be lost on almost any rational person, Sears will buy back as much as $500 million of its own stock.

Sears’ cash position keeps falling and is now only $1.2 billion.

Over the last three months, Wal-Mart shares are off 10%. Sears is down 65%, which makes it more representative of the industry as a whole.

Sears has done so badly in the market because it is deviled by the intractable problems which face most retailers. It has high fixed costs of inventory and labor. It can only lower prices on merchandise so low, and it competes with another half-dozen chains which offer many of the same products at the same prices.

In a robust economy, there is enough milk in the sow to feed all the piglets. That is no longer true, Wal-Mart uses its purchasing power and logistics expertise to trump the competition. The next tier of retailers are left fighting over what is left in the consumer’s wallet.

Sears is in trouble, perhaps more that its share prices tells. If its same-store sales drop another 10% next year, it has no exit.

Douglas A. McIntyre

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