Sears Holdings Corp (SHLD), Toyota Motor Corporation (ADR) (TM): This Retailer Is Making the Wrong Call

It’s in the name

So where does that leave Sears? If the company really wants to peddle luxury items, it needs to take a page out of other successful companies’ playbooks: create a new brand.

Let’s look at Japanese auto-maker Toyota Motor Corporation (ADR) (NYSE:TM) as an example of how to successfully market luxury products. Toyota Motor Corporation (ADR) (NYSE:TM) understood that it couldn’t change how consumers viewed its brand, so the firm simply created a new brand: Lexus. Lexus is one of the most successful luxury brands today with a 15% share of the US market. Last year, 244,000 Lexus vehicles were sold in the US, placing Lexus behind only Mercedez-Benz and BMW in the luxury market.

If Sears wants to sell high-end products, the company should create a new brand to complement its low (Kmart) and middle (Sears) end brands. I’m sure the folks in Sears’ marketing department could come up with a catchy name that spells “luxury” to consumers better than “Sears” does.

Bottom line

Yes, Sears is struggling. In Q1 2013, the firm posted a loss of $279 million, down from a profit of $189 million the year before. The company needs a push to get it back on its feet. But if Sears continues to pursue this radical image overhaul, the company is wasting its time. Until Sears wakes up and redirects focus back to its struggling core, the retailer is a sell.

I wouldn’t buy a Rolex from Sears, and my guess is that neither would you.

The article This Retailer Is Making the Wrong Call originally appeared on Fool.com and is written by Marie Palumbo.

This article was written by Randy Holcombe. Randy has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Marie is a member of The Motley Fool Blog Network — entries represent the personal opinion of the blogger and are not formally edited.

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