Though it has been a happy holiday for many retail stocks sales data Tuesday
confirmed retailers are on track for their best December in three years one
battered big box operator that can't seem to get it right is Sears Holdings
(NYSE: SHLD ). The operator of Sears and Kmart stores says sales are projected
to slide about -4% in the current quarter year-over-year. Poor sales have
sparked an air of near-desperation at Sears and Kmart across 2010 from
testing Sears grocery delivery in urban markets to relinquishing its retail
monopoly on the Craftsman brand via a partnership with ACE Hardware. Then
there's its online Sears Marketplace that is meant to rival Amazon.com
(NASDAQ: AMZN ) with outside vendors selling wares on the site for a nominal
fee. The latest ill- gambit from the once-dominant department store? An online
movie download service. To those who think the criticism of Sears is a bit
harsh, just look at the numbers. The parent company's collective revenue has
dropped over -10% from 2005, the year the buyout of Kmart was executed, through
its most recent fiscal year of 2009. Sales projections for fiscal 2010 are also
grim, projected to slide -2.5% and looking ahead for fiscal 2011 there's
another -2% drop predicted by Wall Street experts. That pretty much tracks the
average annual slide in sales since the 2005 merger with Kmart. Other retailers
like Walmart (NYSE: WMT ) and Target (NYSE: TGT ), meanwhile, are posting gains
in 2010 and looking optimistically at 2011. Looking at this dark trend, it's
no surprise that Sears is trying to right the ship somehow. The company closed
nearly 60 stores in a year's time amid the recession of 2009 and subsequent
weak consumer spending. Now that costs have been cut, the only solution is to
find new revenue streams. Enter Sonic Solutions (NASDAQ: SNIC ), which has
parterned with Sears on an online movie download service, Alphaline
Entertainment . The service enables Sears and Kmart customers to buy digital
copies of their favorite flicks the same day they are released on DVD and
Blu-ray Disc. Sonic is allegedly working with Sears to bring the service to
mobile device as well, a very profitable move that should happen sooner rather
than later. However, the problem that Sears faces is not the launch of a new
website but its already stale image and lack of relevancy with consumes. Folks
who want to go to a cheap department store choose Walmart, not Kmart. Folks who
want hardware and appliances forgo Sears and its flagship Craftsman and Kenmore
brands for Home Depot (NYSE: HD ). And folks who shop online for movies are
likely already loyal to Apple (NASDAQ: AAPL ) iTunes or Amazon.com. Sears has
long been an iconic brand in America, but Wall Street is littered with names of
companies that didn't stay relevant and didn't stick around. If Sears
can't come up with something better than Alphaline downloads, it could suffer
the same fate. Jeff Reeves is editor of InvestorPlace.com. As of this writing,
he did not own a position in any of the stocks named here. Follow Jeff on
Twitter at http://twitter.com/JeffReevesIP.
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