Sears Struggling To Right Ship, Considers Sale Of Kenmore And Craftsman Brands
By Christine Kern, contributing writer
J.C. Penney stands to gain from Sears’ fall.
Experts have been predicting the “demise” of Sears for years now, following 10 years of declining in-store sales, but somehow the retailer is still hanging on. In two big announcements, Sears has revealed major moves that are part of a strategy to reclaim some of the losses and help right the flailing ship.
As part of the release of its first quarter earnings, the retailer revealed that sales fell 8.3 percent to $5.39 billion in the quarter, while revenue fell $488 million to $5.4 billion. Same-store sales decreased 6.1 percent company-wide; Kmart same-store sales fell 5 percent and Sears' U.S. same-store store sales fell 7.1 percent.
Additionally, Sears CFO Robert Schriesheim will be departing “to focus on his other business interests and pursue other career opportunities,” according to a company statement. Schriesheim will remain until his replacement is found, the company said, and will be available as an adviser through January.
Sears Holdings CEO and chairman Edward S. Lampert said that Kmart and Sears continue to struggle in a “heavily promotional competitive environment,” an environment that seems to be affecting many retailers this year. J.C. Penney, Nordstrom, and Macy's all reported less-than-stellar sales in the first quarter as customers remain fickle with their spending and traffic to malls decreases.
As part of a renewed turnaround effort, the retailer is also investigating the possible divestment of its Kenmore and Craftsman Brands, as well as focusing on its Shop Your Way membership program and its high-performing stores. The retailer has been focusing on aggressively cutting costs with store closings and layoffs announced in April, which includes 68 Kmart stores and 10 Sears stores.
“We continue to focus on improving the overall performance of these businesses through changes to our assortment, sourcing, pricing and inventory management practices,” Lampert said in a statement.
Lampert also said the company will “aggressively evaluate all of the potential alternatives available to” its Kenmore, Craftsman and DieHard and Sears Home Services businesses. Sears’s Craftsman and Kenmore brands are still outpacing many other comparable brands in name recognition and consumer trust, suggesting that they could flourish outside of the Sears brand itself. The retailer currently sells those brands and its auto batteries through other retailers, but has apparently realized that it could leverage those strengths further.
Spokesman Howard Riefs told USA Today in an email that possible licensing, a "strategic relationship" with another company and even the possibility of selling one or more of the brands are among the options being investigated by company leadership. "We believe that exploring alternatives for these businesses now is the right approach to create long term value and we believe that we can realize significant growth by further expanding the presence of these brands outside of Sears and Kmart," he wrote.
Appliance sales have always been a bedrock of Sears’ overall success, and they have been one of Sears’ primary strategies to turn things around, but home appliance sales fell in the 1st quarter figures, causing some consternation over the future of the retailer.
One competitor that is looking to leverage Sears’ difficulties is J.C. Penney’s, which recently announced that it is moving into appliances. It began beta testing appliance sales in three markets, with positive results to sales growth and credit card sign-ups, according to The Motley Fool. In the wake of the successful pilot, J.C. Penney’s will roll out appliance sales more broadly, with plans to add appliance showrooms to approximately 500 stores by Fall.