July 14, 2016
PR Newswire: Sealy and Sears Surprise Select Group of New Homeowners with a First Night They Will Never Forget
"As one of the nation's leading retailers of mattresses, Sears is proud to surprise and delight new homeowners who are celebrating their first night at home by giving them a $500 Sears gift card for all the home essentials they need to get settled into their new place," said William Savage, SVP and President of Home, Seasonal Outdoor Living at Sears.
Sears (SHLD) fell 2.4% today, after falling 5.4% yesterday.
I don't think shareholders are really seeing the big picture here. $500 is money well spent!
Granted, I won't be spending more money at Sears because of this campaign, at least not yet. Knowing others are winning $500 doesn't make me want to spend more. Is it just bitter envy and jealousy? No, that's not it. Not my style. I'm simply waiting to potentially win the $500 gift card for being a select existing homeowner someday. Call me a frugal optimist! Hahaha!
Somebody will spend $500 though! I'd be willing to bet that Sears revenue will grow nearly $500 for every $500 gift card they give away!
Why not the full $500? Well, somebody still shops at Sears. If that somebody gets a $500 gift card then they might just use it instead of their own money. That would put a dent in the expected revenue growth of giving away free money.
That's the real genius of this campaign though. Since fewer people shop at Sears these days, the odds of giving a gift card to an existing customer have fallen. There's no way they would have tried this desperate revenue maneuver in my youth. Sears appliances, televisions, stereos, bicycles, tools, clothes, and toys (erector sets, binoculars, microscopes, and so on)? Our house was filled with stuff from the Sears Wish Book! These days? Not so much. There's one lonely Sears freezer in my garage now. Been there for more than a decade. That's it.
Eddie Lampert, my existing home is an untapped source of future Sears revenue growth! For every $500 gift card you send me, I guarantee you the full $500 in revenue growth that you seek! That's right, every last penny. Give you my word! Not only that, but I'll be very quick about it. I wouldn't want to risk the closest Sears store closing before I got to it. You have a nasty habit of shuttering them!
Bad Mark. Bad! Bad! ;)
P.S. For those who have heard the deflation speech of Ben Bernanke, there is something more that can be said here. Sears has a technology, called a free $500 gift card printing press (or, today, its electronic equivalent), that allows it to produce as many free $500 gift cards as it wishes at essentially some cost approaching $500. If you are an existing shareholder, good luck on that.
Disclosure: Neither long nor short. Just continuing to watch the Sears slow-motion train wreck from the sidelines (since 2007).
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