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Kmart general overview
Kmart in the
News
Sears and Kmart: Brands
Combine as new Identity Takes Shape
Martha Stewart, meet Craftsman tools
and Kenmore appliances. The home doyenne has some new brand
neighbors in the aisles of select Kmart stores — and
likely Sears stores too at some point. Sears Holdings Corp.,
which reports quarterly results for the first time this
week, hopes the emerging partnership can breathe new life
into two faded retail behemoths under its 10-week-old ownership. "We’re
looking at different opportunities on how Sears and Kmart
can cross-merchandize," Sears spokeswoman Lisa Gibbons
said Monday in this Chicago suburb at one of nine newly
remodeled Kmart stores now offering Sears merchandise.
Scant sales data exists to assess how
Sears Holdings and its 3,800 stores are faring since the
company was formed with the March 25 purchase of 119-year-old
Sears, Roebuck and Co. by Kmart Holding Corp. Chairman
Edward Lampert, who orchestrated the deal as Kmart’s
chairman and Sears’ largest shareholder. Sears Holdings
is carrying on Kmart’s contrarian policy of not reporting
monthly sales results.
But Wall Street is cautious amid skepticism
that Sears and Kmart are struggling any less now that they
have joined forces. Only one analyst offered an estimate
of first-quarter earnings in an industry survey by Thomson
First Call, compared with two dozen for Wal- Mart.
Some experts openly doubt the company
can keep pace with fast-expanding rivals while being necessarily
preoccupied with melding Kmart and Sears. This year, competitors
such as Target, Wal-Mart and Kohl’s Corp. will be
adding a total of 100 million square feet; next year, that
number will be about 110 million square feet.
Industry consultant Burt Flickinger
believes consolidating the two businesses is "somewhat
chaotic" for now. He expects it will take six to 16
months for the two companies to finish combining — during
which time sales are likely to suffer as key competitors
sharpen their merchandise offerings and get bigger. "First-quarter
sales should be a little soft," predicted Flickinger,
managing director at Strategic Resources in New York. "But
the real cause for concern will be the fourth quarter," which
includes the Christmas season, and next year, he said.
No such pessimism is on display at the
revamped store in Norridge, the only Kmart stocking Sears
products from all areas being tested — appliances,
lawn and garden and tools, along with a home improvement
products kiosk. A gleaming display of Kenmore washers greet
customers near the entrance and colorful banners nearby
proclaim "Craftsman and Kenmore — Great Brands," trying
to draw them to the new tool area located across from Martha
Stewart patio furniture.
While the revamped sections were drawing
only a trickle of traffic Monday morning, Gibbons said
customer reaction to the test in the nine stores has been "very
positive, not only with Sears products but the layout of
the store." The store changes also include wider aisles,
lower shelves, brighter lighting and improved signs.
Chicago resident Ken Peters went to
Kmart for other items but emerged with a Craftsman drill
bit — seemingly just the kind of business the company
wants to attract. However, he said he won’t necessarily
be coming to Kmart to buy his tools. "If there’s
something else here, I might consider it," he said. "But
I don’t think it’s going to change my habits."
Retail consultant Howard Davidowitz
said he doesn’t think shoppers will seek out Kmart
for a Craftsman tool when they can go to a Home Depot and
find many more choices. "When you’re on the
mall and you’re Sears, you’re the only one
selling those brands," said Davidowitz, chairman of
New York-based Davidowitz & Associates. "But it’s
very tough to go off the mall."
Kurt Barnard, president of Barnard’s
Retail Forecasting, has similar concerns. The new Sears
displays in Kmart stores look good, he said, but: "The
thing I am wondering about is whether the Kmart customer
will come to accept the fact it’s no longer just
a five-and-dime store but an appliance store as well, and
will they buy will an appliance at Kmart. Only time will
tell."
The company isn’t tipping its
hand on when products from the popular Martha Stewart brand
might become available in Sears stores, although analysts
would be surprised if it isn’t soon. "We hope
there’s an opportunity in the future to do that," Gibbons
said, declining to elaborate.
Investors aren’t complaining at
Sears’ strategy. The stock, which rose 29 cents to
$154.37 a share Monday afternoon, is up about 18 percent
since it began trading March 28 on the Nasdaq Stock Market.
Factoring in both Kmart and Sears’ performance before
that, the shares’ value has more tripled in the past
year.
Besides Norridge, the newly remodeled
Kmart stores offering an assortment of Sears merchandise
are in Bohemia, N.Y.; Burbank, Calif.; Doylestown, Pa.;
Goleta, Calif.; Rio Grande, N.J.; Silver Spring, Md.; Stevensville,
Md. and Troy, Mich.
Accounting Change Mars Sears/Kmart
Initial Results
By Mike Colias,Associated Press
The inaugural quarterly results from
newly merged Sears Holdings Corp. didn't impress investors,
who sent its stock tumbling Tuesday after the nation's
No. 3 retailer posted a small first-quarter loss amid still-sluggish
sales at Sears and Kmart stores.
Sears Holdings, created through Kmart
Holding Corp.'s March 24 acquisition of Sears, Roebuck
and Co., reported a $9 million loss, or 7 cents a share,
for the February-April period. The results include a $90
million charge related to a change in how Sears accounts
for certain inventory costs. Without the charge, the company
reported a profit of $81 million, or 65 cents per share.
The results sent Sears shares falling $13.41, or 8.7 percent,
to close at $141.50 in trading Tuesday on the Nasdaq Stock
Market, still near the high end of a 52-week range of $51.80
to $158.90.
Some analysts said investors likely
are unhappy about Sears inability to grow sales at its
existing Kmart and Sears locations. Kmart's same-store
sales, or sales at stores open at least one year, fell
3.7 percent on lower demand for seasonal items stemming
from bad weather this spring. Same-store sales at U.S.
Sears store fell 3.1 percent. " On the battlefield
of gaining and losing customers, they're losing as a retailer," said
retail consultant Howard Davidowitz, chairman of New York-based
Davidowitz & Associates. "You cannot continue
to lose market share and survive in retailing," Davidowitz
said.
Sears Chairman Edward Lampert seemed
to refute that notion in a message to shareholders Tuesday.
He said the newly formed Sears Holdings is willing to forgo
market-share gains in favor of "creating value" through
improved cash flow and strategic acquisitions, for example. "In
the past, too often our predecessor companies pursued higher
sales and accepted lower profits to meet objectives that,
we believe, did not increase the value of the companies," Lampert
said.
There are early signs that the same
strategies Lampert used to lift Kmart out of Chapter 11
bankruptcy -- such as cutting costs and improving cash
flow -- already are showing up at U.S. Sears stores, said
independent retail analyst Richard Hastings. Hastings called
the performance at Sears stores "a nice turnaround
despite tough weather conditions." He also pointed
out that Kmart's 3.7 percent slide in same-store sales
was a big improvement over the 12.9 percent drop from a
year earlier. Still, without growing market share, Sears
will have a tough time competing against retailers like
Target Corp. and J.C. Penney Co. Inc., which post consistent
same-store sales growth, said Morningstar analyst Kim Picciola. "If
you don't have customers coming into your doors, it makes
it really difficult to improve your bottom line."
The $12.3 billion acquisition of Sears
by Kmart gave Sears Holdings a combined 3,800 stores in
the United States and Canada, pairing Sears' most successful
products -- such as Craftsman tools, Kenmore appliances
and DieHard batteries -- with such Kmart brands as Martha
Stewart, Jaclyn Smith and Joe Boxer. The company is converting
400 Kmart stores to the new midsized Sears Essential concept.
Since May 1, Sears has notified about 1,400 Kmart employees
that their jobs would either be eliminated or relocated
to its Hoffman Estates, Ill.-based headquarters, the company
said in a filing with the Securities and Exchange Commission
Tuesday. It said the move will result in a $57 million
charge.
Martha Stewart Living Omnimedia and
Kmart Launch Everyday Rooms™ by Martha Stewart Everyday®
Martha Stewart Living Omnimedia, Inc.
and Kmart Holding Corporation, a subsidiary of Sears Holdings
Corporation, introduce Everyday Rooms(TM), an assortment
of affordable, stylish, ready-to-assemble furniture, available
exclusively at Kmart stores nationwide. Created by the
experts at MSLO, the Everyday Rooms(TM) collection features
20 easy-to-assemble furniture pieces for the bedroom, kitchen,
and living room. Inspired by classic American styles, the
furniture is custom-designed to coordinate beautifully
for easy, do-it-yourself decorating.
Toddler and infant department overview
We checked out
both an older Kmart and one of the revamped locations
for this report and found that good things are ahead
for Kmart! The contrast between the old and new Kmart
is huge in terms of the layout, signeage, displays and
overall cheerfulness.
At the new Kmart, some of Sears’ brands
and mindsets have started hitting the floor. All displays
and walls have been lowered to below 5 feet so that guests
can ‘scan’ the entire store from the front
door. Overhead signeage clearly indicates departments as
well helps to focus shoppers’ attentions on the mood
and season at hand. Most apparel departments have large
table displays on aisle with tidy back walls.
The infants and Toddlers departments
were the stars on the floor. The table tops there were
low enough so that even small children could ‘ choose’ what
they liked. A fresh wall of prepackaged baby essentials
was well stocked and the house brand ‘Wonderkids’ showed
well with great signeage and fun product. Carter’s
Watch the Wear (no relation to Carter’s) is a clever
addition to the line up here not only for the name but
for the great job they have done in putting together fun
product for the small sizes!
What we would
like to see more of
With the great new low tables we would
love to see some more mixing of categories; shoes, hats
and even hard lines could be displayed together on the
tables by theme for a cohesive and fresh approach!
A look into the department:
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