Editorial: Down This Road Before

Share this content:
Sounds like Sears is headed down the same bumpy path that Federated got off of earlier this year when it dumped its Fingerhut division because of credit card problems. Many of Sears' troubles, however, are self-made and not from its acquisition of Lands' End a few months ago. Sears has had to release several announcements recently regarding its credit card unit, including that the company cut its earnings forecast for the year because it set aside an additional $222 million for bad credit card accounts in the third quarter alone. It also upped its allowance for credit card delinquencies to $1.6 billion and replaced two executives in charge of credit cards and marketing. Sears, which derives 60 percent of its earnings from credit card profits, saw its stock plummet as much as 32 percent last month because of this.


Any of this seem reminiscent of Fingerhut? In 1999, Fingerhut started offering credit cards to customers. A year later, Federated said Fingerhut's outstanding receivables and fund for delinquent accounts had reached $2.3 billion. This led to Federated's decision to shut down and sell off Fingerhut's assets. In the end, Fingerhut didn't die entirely, as Ted Deikel and Tom Petters bought the name, Web site, inventory and other assets from Federated earlier this summer. They even will mail a holiday catalog later this week. Federated also sold more of Fingerhut's remaining catalogs, Arizona Mail Order and Figi's, to JPMorgan Partners last week.


As for Sears, there may be more pain ahead. Sales are down, and its holiday prospects are dim. Meanwhile, the integration of Lands' End merchandise into its stores is slow-going, though Sears says this will be completed in 180 stores by the end of this month and all 870 stores next year. Remember now, Sears paid a hefty premium -- $1.9 billion -- to acquire Lands' End, so it can't afford to make any mistakes. Its current marketing strategy is to offer Lands' End items at the same prices as the catalogs and Web site. This means that Lands' End clothing will be on racks next to other brands that are already cheaper at full price (and are probably on sale, too). Sears hopes that the Lands' End merchandise will lure higher-end appliance customers into its clothing departments who will be more than happy to pay full price. Will this succeed or will these shoppers want bargains like everyone else? The next two months will answer that question.


close

Next Article in Marketing Strategy

Sign up to our newsletters

Company of the Week

Since 1985, Melissa has helped thousands of companies clean, correct and complete contact data to better target and communicate with their customers. We offer a full spectrum of data quality solutions, including global address, phone, email, and name validation, identify verification - available for batch or real-time processes, in the Cloud or on-premise. Our service bureau provides dedupe, email/phone append and geographic/demographic append services for better targeting and insight. For direct mailers, Melissa offers easy-to-use address management/postal software, list hygiene services and 100s of specialty mailing lists - all with competitive pricing and excellent customer service.

Find out more here »

Career Center

Check out hundreds of exciting professional opportunities available on DMN's Career Center.  
Explore careers in digital marketing, sales, eCommerce, marketing communications, IT, data strategies, and much more. And don't forget to update your resume so employers can contact you privately about job opportunities.

>>Click Here

Relive the 2017 Marketing Hall of Femme

Click the image above