Sears Holdings Corporation

Information about Sears Holdings Corporation

Sears Holdings Corporation

	Public (NASDAQ: SHLD)
Founded	2005 (merger of Kmart and Sears, Roebuck and Company)
Headquarters	Hoffman Estates, Illinois, USA
Key people	Edward Lampert, Chairman Aylwin Lewis, President and CEO of Kmart and Sears Retail J. Miles Reidy, CFO
Industry	Retail
Products	Brands such as Craftsman, Kenmore, Lands' End, DieHard, Martha Stewart Everyday, Joe Boxer, Jaclyn Smith
Revenue	$49.124 billion USD (2006)
Net income	$858.0 million USD (2006)
Employees	355,000
Website	www.searsholdings.com

Sears Holdings Corporation (NASDAQ: SHLD) is the fourth largest retailer in the United States, behind Wal-Mart, The Home Depot, and Kroger.^[1] It was formed in 2005 with the purchase of Sears, Roebuck and Company of Hoffman Estates, Illinois by Kmart Holdings Corporation of Troy, Michigan.

The company operates 3,800 retail locations under the mastheads of Sears, Sears Grand, Sears Essentials, Sears Hardware, Kmart, Big Kmart, Super Kmart, The Great Indoors, Orchard Supply Hardware, and Lands' End stores.

The company maintains its corporate headquarters in Hoffman Estates, Illinois.

History

Kmart and Sears merger

In November 17, 2004, Kmart stores announced its intention to purchase Sears Stores, both divisions of their respective parent organizations. It is mistakenly believed that Sears as a whole was purchased by Kmart; however, this is not true, as after Kmart Stores completed the purchase of Sears Stores, Sears Holdings Corporation purchased Kmart Holdings Corporation. The new corporation announced that it would continue to operate stores under both the Sears and Kmart brands.

The two companies cited several reasons for combining forces:

Sears had begun investing in new, larger off-mall stores, called Sears Grand. Earlier in the year, Sears had purchased dozens of current Kmart locations; the merger permitted the combined company to accelerate that process.
Proprietary brands held by both companies could be made more accessible to their target demographics by leveraging their combined real estate holdings. This was estimated to be an expected $200 million a year in revenue synergies.
At least $300 million a year in cost savings was expected annually, particularly in the supply chain and in administrative overhead.
The establishment of a shared customer-focused corporate culture between the two companies was estimated to yield improvements in revenue per unit area.
Preservation of two brands after the merger allowed Sears Holdings to continue focusing on different customer demographics, without alienating either group.

The new company is directed by a board of directors composed of members from the two companies: seven members from Kmart's board, and three from Sears. Shareholders in the Kmart Corporation received one share in the new company. Shares of Sears, Roebuck and Company stock were converted into a combination of 55% stock and 45% cash (at $50 a share). Stockholders had a choice of receiving either stock or cash, subject to the predefined ratio.

The merger was completed on March 24, 2005, after receiving regulatory approval from the government and approval by shareholders of both companies.

The Sears Holdings Corporation then re-modeled many Kmarts and Big Kmarts by changing their signage to "kmart." The "K" in Kmart was made lower-case to make Kmarts feel and look more high tech for the 21st century.

Sears Holdings today

The exterior of a typical Sears Essentials store.

Sears Holdings continues to operate stores under the Sears and Kmart mastheads. In 2005, Sears introduced a new store format, called Sears Essentials; Some Kmart stores were converted to Sears Essentials, as well as a few locations that were acquired from Wal-Mart and several bankrupt discount retailers. The new store format combined the Sears store concept with the Kmart format, which was supposed to help the company better compete with Wal-Mart and Target. The project has since been resigned, and merged with the Sears Grand concept.

In 2005, Nike announced that it would no longer allow its products to be sold in Sears stores. Analysts speculated that Nike did not want its shoes and apparel sold in Kmart stores, and terminated its sales agreement with Sears Holdings to prevent this.

Sears Holdings has begun cross-selling merchandise between its two brands. For example, Craftsman tools are now available in Kmart stores; they were previously exclusive to the Sears brand.

However Martha Stewart brand paint colors are now no longer available at Sears.

Sears Holdings owns 70% of Sears Canada,^[2] a large department store chain in Canada, similar to the United States stores. (Sears Holdings is trying to buy the remainder of Sears Canada it does not own). Like Target stores, Kmart-branded stores in Australia belong to Coles Group; Coles Group also holds the rights to the Kmart brand in New Zealand.

Because Kmart Corporation changed its name to Sears Holdings and because it is converting some Big Kmart stores to Sears Grand stores as a test, there is speculation that Sears Holdings may drop the Kmart name entirely in the next decade.

In November 2006, speculation rolled around as The Chicago Sun Times reported that Sears may buy Safeway, Home Depot, Gap, RadioShack, Pep Boys, or Anheuser Busch.^[3] The Washington Post, in an article dated March 11, 2007, described the current Sears as a hedge fund with money being diverted from the maintenance and improvement of stores to non-retail financial investments. A former executive is quoted as saying the company faces an "uncertain future." Surprisingly, a third of pre-tax income in the third quarter of 2006, according to the Washington Post, was due to financial trades not the retail business. However, these investments performed poorly in the fourth quarter.^[4]

Chains

Current

The exterior of a typical Sears Grand store.

Kmart is a chain of discount department stores that are usually free-standing or located in strip malls. They carry electronics, music, movies, bedding, hardware, sporting goods, clothing, toys, jewelry, office supplies, health and beauty products, home décor, and a limited selection of food items. Many stores also have a garden center, a pharmacy, and usually have a K-Cafe or Little Caesars Pizza station. Kmart stores range from 80,000 to 110,000 square feet (7,400 to 10,200 m²). Many of these stores were converted into Super Kmart, and most of them were converted into Big Kmart.
Big Kmart is a chain of discount department stores that carry everything a regular Kmart carries, but with an emphasis on home decor, children's clothing, and more food items. Big Kmart stores range from 84,000 to 120,000 square feet (7,800 to 11,100 m²). Big Kmart stores also feature a garden center, a pharmacy, and usually have a K-Cafe or Little Caesars Pizza station.
Super Kmart is a chain of hypermarkets that carry everything a regular Kmart carries, but has a full line of groceries (including meat and poultry, baked goods, delicatessen, frozen foods, dairy products, garden produce and fresh seafood). Super Kmart stores range from 140,000 to 190,000 square feet (13,000 to 17,700 m²). These stores are also known as Super Kmart Center. Super Kmart stores also feature a garden center, a video rental store, a branch from a local bank, a pharmacy, and usually have a K-Cafe or Little Caesars Pizza station. Several also include Kmart Express gas stations. Fewer than 60 Super Kmarts are still open, with most having been closed during the two rounds of closures during 2002 and 2003.^[5] Some of the surviving Super Kmarts were those in regions without a strong Wal-Mart presence, including Ohio and Michigan. A typical Super Kmart sells around 30 million dollars of merchandise during one fiscal year.
Lands' End aside from carrying the Lands' End clothing line at Sears stores, Sears Holdings also operates 16 Lands' End stores that carry only Lands' End clothing. These stores are located in outlet malls and regular malls.
Orchard Supply Hardware, known as Orchard or OSH for short, is a chain of free-standing hardware stores that carry home repair, hardware products and lawn and garden supplies. Orchard Supply Hardware stores are 40,000 square feet (4,000 m²). There are currently 84 stores, all of them in California. Sears now owns 80.1% of the chain, and revealed intentions in May 2005 to spin it off. Richard Karn of Home Improvement fame was a spokesman for the chain.

An older Sears exterior with newer signage.

Sears Full-Line is a chain of mid-range department stores that are located in shopping malls; they carry clothing, jewelry, appliances, hardware, lawn and garden supplies, lawn mowers, paint, sporting goods, automobile repair, office supplies, electronics and school supplies. Sears stores are usually multi-level. There are 870 full-size Sears stores in the United States.
Sears Grand is a chain of free-standing hypermarkets located away from shopping malls. They carry everything a regular Sears carries, plus health and beauty products, toys, baby care, cleaning supplies, home décor, pet food, cards and party supplies, books, magazines, music, movies, and a full-line of groceries. Sears Grand stores range from 165,000 to 210,000 square feet (15,300 to 19,500 m²).^[6] The first Sears Grand opened at Jordan Landing in West Jordan, Utah in 2003. At 225,000 square feet, the Jordan Landing store is currently the largest in the chain. Unlike many other hypermarkets in the United States (such as Wal-Mart Supercenters and Meijer), Sears Grand stores are not continuously open.
Sears Appliance & Hardware is a chain of hardware stores that carry the whole line of Sears hardware and are usually free-standing or located in strip malls. Typically these stores are about 25,000 square feet.
Sears Dealer Store is a chain of smaller stores that are operated as a store where the proprietor owns or leases the real-estate while Sears Holdings handles the marketing and owns the inventory, and there are no franchising fees levied against the store proprietor. These stores are usually located in smaller markets that do not support full-sized Sears. They are signed as Sears and are usually free-standing or located in strip malls. They primarily concentrate on hardware, appliances, and lawn and garden supplies. This was originally intended as a replacement to the now discontinued Sears Catalog.
Sears Outlet is an outlet version of Sears department stores located in outlet malls.
Sears Parts & Repair Center is a chain of service centers that typically sell parts for lawn & garden equipment and appliances and also feature a carry-in point for customers to bring merchandise in that needs to be repaired either in or out of warranty. Typically labeled Sears Service Center or Sears Home Central, two names that also refer to the Parts and Repair Centers. Sears has started closing many of these down as more and more of its service and repair business is home-based.
The Great Indoors is a chain of free-standing home décor stores that carry high end appliances, bedding, and kitchen and bath fixtures. The Great Indoors stores are 130,000 square feet (12,000 m²).
A & E Factory Services is a joint venture held by Whirlpool and Sears Holdings.^[7] A & E Factory Service is a network of mobile service vans with a long history of performing appliance repairs.^[8]

Former

Sears Essentials is a chain of department stores that are located away from shopping malls (free-standing); carried everything a regular Sears carries, plus health and beauty products, toys, baby care, cleaning supplies, home décor, pet food, cards and party supplies, books, magazines, music, movies, and a limited amount of food items. Sears Essentials stores are between 70,000 to 100,000 square feet (6,500 to 9,300 m²).^[9] These stores are essentially Sears-Kmart hybrid stores. Sears Essentials was declared a failure and Sears will convert these stores into their Sears Grand format.^[10]

Brands

Craftsman - tools and mens clothing
DieHard - car batteries
Easy Lving - Interior Paint
Kenmore - appliances
Jaclyn Smith - branded clothing
Joe Boxer - branded underwear and home decor
Lands' End - branded clothing and home decor
Martha Stewart Everyday - branded home decor, kitchen and home improvement items
Route 66 - branded clothing
Sesame Street - branded clothing
Ty Pennington style // sTYle - home decor
Weatherbeater - Exterior Paint
Personal Identity - branded juniors clothing
Canyon River Blues - branded mens and misses clothing
Covington - branded mens and misses clothing and footwear
Winnie the Pooh - branded childrens clothing
Structure - branded young men's clothing (label originally part of what is now the Express chain, purchased by Sears in 2003)
BobbyO - Bobby Orlando branded teen clothing
Apostrophe - branded misses clothing and jewelry
Parallel - branded misses clothing
Latina Life - branded misses clothing and jewelry
Two Hearts - branded maternity clothing
Celestial Star - branded IGI-certified diamond fine jewelry
Simply Love - branded diamond solitaire fine jewelry
Promise Your Love - branded diamond fashion, diamond bridal, and lab created pink sapphire and ruby fine jewelry
Galaxy - branded discount appliances
Protron - branded discount electronics
LXI - discontinued electronics brand

Major sponsorships

The current NASCAR Craftsman Truck Series logo.

Sears Holdings Corporation sponsors, through the Sears Auto Centers, the Formula D Ben Schwartz Sears/Falken Saturn Sky drift car.

The Sears Holdings Corporation sponsors the NASCAR Craftsman Truck Series using the Craftsman brand as the title sponsor. Craftsman tools are also the official tools of NASCAR.

Sears Holdings Corporation sponsored .

Sears Holdings Corporation sponsors and currently has naming rights to the Sears Centre, an arena constructed in 2006 in Hoffman Estates, Illinois.

Sears sponsored the #10 Gillett Evernham Motorsports car of Scott Riggs for the September 2, 2007 running of the Sharp AQUOS 500 at California Speedway through it's Sears Auto Center branch. However, Riggs failed to qualify for the event.

Diversity

Sears Holdings received a 100% rating on the 2006 Corporate Equality Index published by the Human Rights Campaign^[11], up from 57% in 2004.
Sears Holdings was named one of the 100 Best Companies for Working Mothers in 2004 by Working Mothers magazine.

Controversy

Sears Holdings is a boycott target by Life Decisions International for funding associated with Planned Parenthood. ^[12]

References

1. ^ STORES.org list of the top 100 US retailers (as of July, 2006)
2. ^ Sears Holdings raises Sears Canada ownership to 70% from 54%
3. ^ Sears may have eye on Safeway
4. ^ Washington Post, Risky Side of Sears: Retailer Is Recast As a Hedge Fund, As Sales and Stores Decline, Chairman Focuses on Investment, March 11, 2007
5. ^ Kmart At A Glance
6. ^ Sears Grand Fact Sheet
7. ^ This Week in Consumer Electronics, Whirlpool Bears First Fruits Of Maytag Merger At Home Depot, 10/09/2006
8. ^ Yard and Garden, Filling the gap: now that home centers are "servicing what they sell," where do dealers fit into this rapidly changing retail channel?; Profitably running your service department, March, 2005
9. ^ Sears Essentials Fact Sheet
10. ^ Sears ditches Sears Essentials name
11. ^ 2006 Corporate Equality Index
12. ^ Life Decisions International Home page. Life Decisions International. Retrieved on 2007-8-14.

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