Sears Selling Brands

May 27, 2016 by  

Sears Selling Brands, Long-struggling retailer Sears says it plans to try to leverage its strongest brands like Kenmore and Craftsman to help sustain itself as it posted a larger first-quarter loss Thursday and said sales fell at its Kmart and namesake stores.

The chain said it’s looking at options for prized brands that also include DieHard and Sears Home Services, including possible partnerships or deals that could expand their distribution and service offerings. It gave no specifics, but said it believes the Kenmore, Craftsman and DieHard brands can grow significantly with an expanded presence outside of Sears and Kmart.

Sears shares were flat at $12.52 each in late-morning trading Thursday.

Other major department stores such as Macy’s, Kohl’s and J.C. Penney saw sales decline in the latest quarter as they wrestle with changes in shopping preferences. Americans are making their purchases online and spending more on experiences like eating out rather than new clothes. And when shoppers do buy clothes, it’s at discounters like T.J. Maxx.

But Sears fared far worse, and analysts put much of the blame on the company itself. Sears Holdings Corp., based in Hoffman Estates, Illinois, has struggled for years with weaker sales, unable to keep up with companies that sell appliances, like Home Depot, or general merchandise, like Wal-Mart, or everything, like Its stores, largely outdated and often grungy, are its albatross.

Sears saw declines even in appliances, where its Kenmore brand and others are an established presence, even as other retailers enjoyed increases from an improving home market. That, says Neil Saunders, CEO of the research firm Conlumino, highlights Sears’ main issue: “It has fallen out of favor with American shoppers who continue to abandon the chain at a fairly alarming rate.”

The company’s Chairman and CEO Edward Lampert has pledged to investors that a turnaround is in store, but it has yet to happen. Sears has been selling assets to raise cash and accelerating store closures. In April, it said would close another 68 Kmarts and 10 Sears stores. That accounts for close to 5 percent of its nearly 1,700 stores. In 2011, it operated 4,000 stores.

Those closures come as Sears tries to shift its focus from running a store network to a member-focused business. Loyal shoppers receive incentives to buy. But those moves haven’t gained much traction with consumers.

For the quarter that ended April 30, sales at Kmart stores in the U.S. that have been open for at least a year fell 5 percent. At Sears locations, they dropped 7.1 percent. The metric is a key gauge of a retailer’s health because it excludes results from locations recently opened or closed.

The declines were fueled by declines in home appliances, clothing, consumer electronics, footwear and Sears Auto Centers. Lampert said Thursday that clothing sales continue to be hurt by heavy promotions from competitors.

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