Sears to Explore Options for Kenmore, Craftsman, DieHardby
CFO Schriesheim plans to leave money-losing retailer
First-quarter loss widens to $471 million, Sears says
Sears Holdings Corp. is considering options for its Kenmore, Craftsman and DieHard brands, as well as its Sears Home Services repair business, signaling that the retailer may sell more assets to stem widening losses.
The company will “aggressively” evaluate all alternatives for the businesses and has hired Citigroup Inc. and LionTree Advisors to assist in the efforts, according to a statement Thursday. Sears also reported that its first-quarter net loss expanded to $471 million, or $4.41 a share, and said Chief Financial Officer Robert Schriesheim plans to leave the company.
With the retailer’s stores showing little sign of a revival, Chief Executive Officer Edward Lampert may again be looking to sell off parts of the company to bring in cash. Lampert -- a hedge fund manager who’s also the retailer’s chairman and largest shareholder -- already has hived off the Sears Hometown and Outlet Stores business and Lands’ End clothing brand, while also selling off store locations and moving others into a real estate investment trust.
The Kenmore, Craftsman and DieHard brands “are beloved by the American consumer, and we believe that we can realize significant growth by further expanding the presence of these brands outside of Sears and Kmart,” the company said. The home-services business also “has greater potential than what we have delivered in the past.”
Investors cheered the plan to seek options for the businesses, sending the shares up as much as 17 percent to $14.61 in New York. Hoffman Estates, Illinois-based Sears had slid 39 percent this year through Wednesday.
The brands under review -- Kenmore appliances, Craftsman tools and DieHard auto batteries -- are staples found in many American households, and key assets inside Sears. Yet their sales have been slipping, even after Sears hired a licensing agent in 2012 to offer them outside of Sears and Kmart stores. In September, Sears named Tom Park to run the unit in charge of the brands.
Lampert also has been building up the company’s digital and loyalty programs in a quest to turn the department-store business around after five years of losses. He has said he envisions a leaner retailer with fewer and smaller stores.
Yet 11 years after Lampert merged Kmart and Sears Roebuck & Co., both chains continue to lose money and shoppers, with first-quarter sales slipping 8.3 percent to $5.39 billion. Lampert told shareholders at the company’s annual meeting earlier this month that his goal is to return to profitability this year, though he declined to forecast that the company would meet that target. Turning around Sears isn’t easy, he said, likening the task to efforts to close the U.S. military’s prison camp at Guantanamo Bay, Cuba.
“Our Sears domestic and Kmart apparel businesses continue to be negatively impacted by a heavily promotional competitive environment,” Lampert said in Thursday’s statement. “We continue to focus on improving the overall performance of these businesses through changes to our assortment, sourcing, pricing and inventory management practices.”
Schriesheim will leave to focus on his other business interests and pursue other career opportunities, Sears said. He agreed to stay in the job until a replacement is hired.