QUOTE AND NEWS
Yahoo  12 hrs ago  Comment 
Sears' spinoff of Lands End liberates a good brand with an attractive business model, and highlights Sears' knack for harvesting value by breaking off pieces of the struggling company.
TheStreet.com  Apr 4  Comment 
NEW YORK (The Deal) -- Though recent media reports have cast Edward Lampert's decision to back off from holding Sears Holdings  commercial paper as a bad sign for the department store retailer, its financials counsel against immediate panic. And...
DailyFinance  Apr 4  Comment 
Award-winning independent director and producer, Trish Dalton and editor and cinematographer, John Sears, will be setting out on a 10-week journey across the country to explore the true fabric of America’s economy – small...
Cloud Computing  Apr 2  Comment 
Following the cybersecurity breaches at Target, Sears and other major retailers, the evolution of today’s technology reflects the need for business executives to keep up-to-date with new innovations and challenges that could...
SeekingAlpha  Apr 1  Comment 
By Elliott R. Morss: ©Elliott R. Morss All Rights Reserved Online Sales I earlier concluded that newspapers will only survive if they can figure out how to make money off their web sites. And today, we hear about struggling retailers, e.g.,...
SeekingAlpha  Mar 31  Comment 
By Chuck Walston: I bet you awoke this morning bemoaning your failure to purchase shares in Sears (SHLD) back in 1993. In the early nineties, Sears was the dominant retailer with powerful subsidiaries in the insurance, lending and investment...
Wall Street Journal  Mar 27  Comment 
Sears Holdings Corp. unveiled a new fast-fashion shop within its stores and website called Now + Here, providing monthly deliveries of trendy items.
TheStreet.com  Mar 25  Comment 
NEW YORK (TheStreet) -- Ever wonder if celebrities and sports stars know on a deeper level about what their sponsors are up to? I have long pondered if Michael Jordan knows how Nike is removing costs from its products, if John Cena realizes Kmart...
Forbes  Mar 23  Comment 
Dr. Bob Sears loves you. He loves his work. Just don't call him.
TheStreet.com  Mar 21  Comment 
PORTLAND, Ore. (TheStreet) -- You know what you don't see at Amazon  or any other online retailer? Empty shelves. That has been the crux of what my colleagues Rocco Pendola and Brian Sozzi have been trying to get across in recent pieces like 1...




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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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