QUOTE AND NEWS
Clusterstock  8 hrs ago  Comment 
Kmart is in trouble. Sears Holdings, Kmart's parent company, has closed more than 300 Sears and Kmart stores since 2010, and th e company has announced plans to close even more. Photographer Nicholas Eckhart has been tracking Sears and other...
Clusterstock  11 hrs ago  Comment 
Sears, once America's golden retailer, is closing dozens of stores — including its flagship location in Chicago — to try and revive revenues. The company's sales have been falling since 2005, but its problems may stretch as far back as the...
Clusterstock  Oct 24  Comment 
Sears will probably not recover from its decades-long decline.  "As a retailer they're at the point of no return," said David Tawil, cofounder of Maglan Capital and an expert in distressed retail companies. "The real question now is when does...
Clusterstock  Oct 23  Comment 
(Reuters) - Struggling retailer Sears Holdings Corp will lay off at least 5,457 employees and close over 100 stores, many before Christmas, according to a Seeking Alpha report citing liquidation notices and employees. Sears shares rose 4.6...
USAToday.com  Oct 23  Comment 
Sears shares jump on report of 116 store closures, nearly 6,100 layoffs.
Benzinga  Oct 22  Comment 
Investors appeared pleased with Sears Holdings Corp's (NASDAQ: SHLD) liquidity-raise plans announced on Monday, as shares surged just over 23 percent that day. Sears announced two plans of action to raise much-needed cash in time for the holiday...
SeekingAlpha  Oct 21  Comment 
By Paulo Santos: This is an interesting angle which I seldom see explained anywhere. Sears (NASDAQ:SHLD) is issuing subscription rights (SHLDR) to subscribe Sears Canada (SRSC) shares. Each SHLD share gives you one such subscription right. So how...
Benzinga  Oct 21  Comment 
Do the huge October 20, 2014 gains in Sears Holdings Corp (NASDAQ: SHLD) signal the beginning of a new trend, or is it just another "dead cat" bounce along the road to ruin? That is the key question for investors to ponder. The fact that Sears...
Forbes  Oct 21  Comment 
Yesterday’s announcement that Primark will lease about 520,000 square feet in seven locations from Sears Holding is of great concern to me. The Sears properties they are going into are in prime locations in the Northeastern part of the United...




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Sears Holdings (NASDAQ: SHLD) is the third largest general merchandise retail company in the United States after Wal-Mart (WMT) and Target (TGT). SHLD operates under the Sears and Kmart names in the US and Canada. Product offerings in SHLD stores include apparel, jewelry, appliances, hardware, sporting goods, car repair services, home improvement services and electronics.

The company was formed in 2005 by the merger of Sears Roebuck (Sears) and Kmart Holdings. The merger was coordinated by Edward Lampert, the current Chairman, whom now holds over 54% of the shares outstanding through his hedge fund ESL Investments.[1] Despite strong brand recognition, Sears Holdings, as with Kmart and Sears before it, has suffered several successive years of falling sales and market share erosion. These negative trends can be largely attributed to increasing competition in the industry. Other retail giants such as Wal-Mart Stores (WMT) and Target (TGT) have been aggressively capturing ever greater amounts of customers' wallet share through expanded selections and steeper discounts.

Company Overview

Sears Holdings is composed of three business segments: Kmart, Sears Domestic, and Sears Canada.The firm has no international presence outside of Canada. SHLD's product assortments in both Sears Department Stores as well as Kmart SuperStores and Discount Stores cover virtually all product categories: clothing, major home appliances (refrigerators, dishwashers, etc.), home improvement/home repair, auto repair services, and groceries.

==Business Segments

  • Kmart (35.7% of total revenue): Kmart is a general merchandise and discount chain that competes directly with Wal-Mart (WMT), Target (TGT), and other mass merchant stores.
  • Sears Domestic (53.9% of total revenue): The Sears Domestic segment is comprised of full line department stores that sell general merchandise ranging from clothes and electronics to tools and appliances, specialty stores (i.e. Sears Hardware), Direct-to-Consumer Land’s End operations, and Home Services stores.
  • Sears Canada (10.5% of total revenue): Sears Canada is a consolidated, 73% owned subsidiary of Sears that conducts similar retail operations as Sears Domestic -- Sears Canada is composed of both full-line and specialty Sears-brand stores similar to Sears Domestic stores but with a greater sales emphasis on apparel and other softline products.

Brands

SHLD owns and trademarks many popular brands which help to increase company visibility and boost sales. Some of the company's most popular brands are:

  • Kenmore
  • Diehard
  • Lands' End
  • Jaclyn Smith
  • Joe Boxer
  • Apostrophe
  • Covington brands

SHLD has securitized the Kenmore, Craftsman, and Diehard brands into KCD IP (Kenmore Craftsman DieHard intellectual property), a wholly owned, bankruptcy-remote subsidiary. In addition, the company also has th rights to sell an exclusive line of Jaclyn Smith and Martha Stewart Everyday products.

Business Growth

FY 2010 (ended January 30, 2011)[2]

  • Net sales decreased 1.6% to $43.3 billion.
  • Net income decreased 43% to 133 million.

Trends and Forces

Using Technology to Meet Customers' Needs

Sears announced the launch of AdYourWay, a shopping tool that caters to the needs of each individual customer. The tool "gets to know" the customer by analyzing product selection and then displays personalized content and customized recommendations. For example, a customer can "follow" an item and receive notifications when it is on sale. As David Friedman, senior vice president and president of marketing, puts it "AdYourWay is a unique shopping tool that puts control back into the hands of our customers, allowing them to manage and organize both the products and the offers that interest them.[3]

AdYourWay marks a growing trend where retailers are using technology to better serve their customers. For example, Nordstrom (JWN) puts RFID chips on all of its items so that online customers can see exactly what is in each store and so that the store has better inventory management. As a result of this technological improvement, Nordstrom was able to better withstand the negative effects of the sluggish economy compared to its competitors. AdYourWay provides customers with an enhanced and more efficient shopping experience, which the company hopes to turn into more revenue.

Growing Sears' Exclusive and Private Brands

Department stores are increasingly seeking to distinguish themselves and earn higher profit margins by offering exclusive brands and private label brands. Exclusive brands are brands marketed under the wholesaler's name that are sold only in a particular chain; one exclusive brand at Sears is the Craftsman line that can only be purchased online or at Sears stores. Private label brands are produced by wholesalers, but sold under the brand name of the retailer. Exclusive brands such as Kenmore and Craftsman, can help draw customers into Sears stores, as the products can only be found at Sears. [4] Craftsman tools can also be purchased at Costco and Ace Hardware.

Competition

Sears Holdings is the third largest general merchandise retailer in the world (in terms of net sales) behind big box retailers Wal-Mart (WMT) and Target (TGT), whose enormous scale allows each to extract value in their inventory purchases and pass these savings on to consumers. SHLD's competitors in the mid-tier department store industry include Macy's Inc. (M), J.C. Penney (JCP), and Kohl's (KSS).

References

  1. MSNBC "Kmart to acquire Sears in $11 billion deal" 17 Nov 2004
  2. SHLD 2010 10-K pg. 21
  3. Yahoo Finance "Sears Holding Launches AdYourWay, New Personalized Online Shopping Solution" 29 October 2010
  4. Seeking Alpha "Unseen Value in Sears' Brands" 13 March 2008
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