State Street another sign Sears is winding down

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The storied history of Sears, starting with the “big book” catalog 118 years ago, is slowly winding down as the Hoffman Estates-based retailer divests itself piecemeal, analysts agreed in interviews Wednesday.

That Sears is closing its flagship on State Street, a store that represented the company’s return to downtown Chicago in 2001 after an 18-year absence, is just one more indication that the money-losing retailer is cutting its losses, the analysts say.

“Why do [shoppers] go to Sears? There is no compelling reason,” says Evan Mann, senior credit analyst at Gimme Credit in New York.

Mann and other analysts cite the oft-repeated criticism that Sears Holdings Corp. Chairman Edward S. Lampert, a hedge fund billionaire, needs to hire a merchandising expert to lead the ailing company if he wants to turn it around.

Lampert’s strategy emphasizes a shopper loyalty program called Shop Your Way, in which members earn points by shopping online or in stores. They redeem the points to buy goods at Sears, Kmart and mygofer.com.

In a blog post Tuesday, Lampert says it’s clear the company’s strategy is in line with how people shop today.

But the Shop Your Way and online-sales growth fail to make up for Sears’ retail losses, says Morningstar analyst Paul Swinand.

Online spending accounted for 3 percent of Sears’ revenues in the latest fiscal quarter ended Jan. 6. So while online sales jumped 20 percent in that period, the Kmart and Sears chains had a combined 7.4 percent revenue decline.

Sears could survive for several years on its cash cushion and line of credit, Swinand says, but the fear is that unexpectedly bigger losses will hasten the company’s financial difficulties.