Macy's (NYSE: M) just cut 7,000 jobs, 4% of its workforce. Almost all retailers are suffering, so the question is which chain will have the next large round of lay-offs.
Bet on Sears (NASDAQ: SHLD). Its K-Mart and Sears stores have been doing poorly. If Macy's has to let people go, Sears has to be facing similar trouble.
According to the AP, Sears same-store sales fell 7.3% in December. On that basis, sales in Sears U.S. stores dropped almost 13%. That kind of erosion is just not sustainable. Not with the same cost structure Sears had last year. If anything, retail sales will be worse in the first part of this year now that the holidays are over.
Sears shares trade around $40, down from a 52-week high of $112.80. Investors have obviously lost confidence. Sears has 2,100 K-Mart and Sears locations and 330,000 workers.
Sears will probably make cuts before the end of the quarter. The news may even be viewed as positive and could send the shares up. The firm is just too bloated.
Douglas A. McIntyre is an editor at 24/7 Wall St.
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