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Sears Holdings
USINFO | 2013-07-25 09:39
Sears Holdings Corporation is an American multinational corporation headquartered in Hoffman Estates, Illinois. The company was founded in 2005 by the merger of Sears (of Hoffman Estates) and Kmart (of Troy, Michigan).[2] It operates 4,000 retail locations under the mastheads of Sears, Kmart, and their subsidiaries. The company is the tenth largest retailer by annual revenue in the United
States behind Walmart, Kroger, Target, Walgreens, The Home Depot,Costco, CVS Caremark, Lowe's and Best Buy.
On November 17, 2004, Kmart Holdings Corporation announced its intention to purchase Sears, Roebuck and Co. The new corporation announced that it would continue to operate stores under both the Sears and Kmart brands. The merger of Kmart and Sears closed on March 24, 2005, following affirmative shareholder votes of both companies. Sears Holdings now operates Sears and Kmart stores. The company continues to market products under brands held by both companies.
The two companies cited several reasons for combining forces:
The merger was completed on March 24, 2005, after receiving regulatory approval from the government and approval by shareholders of both companies.
2000s
The exterior of a typicalSears 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 Walmart 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 Walmart and Target. The project has since been resigned, and merged with the Sears Grand concept.
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 92 percent of Sears Canada, a large department store chain in Canada, similar to the U.S. stores. (Sears Holdings failed in 2006 to buy the remainder of Sears Canada that it does not own because Bill Ackman took a 17.3 percent stake in it and prevented any takeover. He accepted to sell his stake at $30 a share on April 23, 2010.) Sears Holdings also owns 20 percent of Sears Mexico; Carlos Slim owns the other 80 percent. Like Target stores, Kmart-branded stores in Australia belong to Wesfarmers (which acquired former owners Coles Group in 2007); Wesfarmers also holds the rights to the Kmart brand in New Zealand.
In 2005, Sears Holdings sold a stake in hardware chain Orchard Supply Hardware to private equity firm Ares Management. On December 14, 2011, Sears Holdings announced that it would spin off its remaining holdings in Orchard Supply to shareholders effective December 30, 2011.
In November 2006, speculation rolled around as The Chicago Sun Times reported that Sears may buy Safeway, Home Depot, Gap, BJ's Wholesale Club, Radio Shack, Pep Boys, Anheuser-Busch or all seven companies.[6] The Washington Post, in a March 11, 2007, article, 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 was quoted as saying the company faced 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.
In 2007, the company placed its three major brands in KCD IP, a "separate, wholly owned, bankruptcy-remote subsidiary". KCD stands for the three brands: Kenmore, Craftsman, DieHard. KCD IP then issued $1.8 billion in bonds that were sold to Sears' insurance subsidiary based in Bermuda. Sears would thus pay KCD for use of the three brands' trademarks
On December 14, 2007, the company submitted a draft merger agreement to buy Restoration Hardware for $6.75 a share. Sears already owned 13.7 percent of the company.[9] That offer was withdrawn after Restoration's shares tumbled and a competing bid from private equity firm Catterton Partners was lowered to $4.50 per share. On February 28, Sears Holdings made an offer of $4.55 a share.
In June 2008, Sears launched Servicelive.com, which was intended to connect Sears customers with local contractors for home improvement projects. The site charges 10 percent of the contract price for each completed service, and offers more than 40,000 contractors. Servicelive.com was redesigned in March 2010.
On February 22, 2010, the Sears Automotive business launched a new Independent Sears Auto Center franchise program that offers automobile dealers the opportunity to operate licensed Sears Auto Centers. The Coleman Auto Group of East Windsor, New Jersey, is the first dealership and is expected to open a Sears auto center in March 2010.
The company has faced consistent quarters of decline since the merger of Sears, Roebuck, and Co. and Kmart Corp. Since 2005, the first year of results for the merged company, its income plunged 84 percent from $858 million, or $6.17 per diluted share. Eddie Lampert has held the title of chairman of Sears Holdings over the period of decline. The first quarter of 2011 did not appear any better, with the company posting a net loss of $170 million, or $1.58 a share, for the quarter ended April 30. Some industry analysts feel the heart of the problem is Eddie Lampert's "penny-pinching" cost-savings by stifling investment into stores. Instead the company has been buying back stock and increasing its presence online.
On December 27, 2011, after poor holiday sales, the company announced 100 to 120 Sears and Kmart stores would close.
On February 23, 2012 Sears Holdings Corp. announced it is closing all nine "The Great Indoors" stores
States behind Walmart, Kroger, Target, Walgreens, The Home Depot,Costco, CVS Caremark, Lowe's and Best Buy.
History
FoundingOn November 17, 2004, Kmart Holdings Corporation announced its intention to purchase Sears, Roebuck and Co. The new corporation announced that it would continue to operate stores under both the Sears and Kmart brands. The merger of Kmart and Sears closed on March 24, 2005, following affirmative shareholder votes of both companies. Sears Holdings now operates Sears and Kmart stores. The company continues to market products under brands held by both companies.
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 Super 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 was intended to allow Sears Holdings to continue focusing on different customer demographics, without alienating either group.
The merger was completed on March 24, 2005, after receiving regulatory approval from the government and approval by shareholders of both companies.
2000s
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 Walmart 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 Walmart and Target. The project has since been resigned, and merged with the Sears Grand concept.
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 92 percent of Sears Canada, a large department store chain in Canada, similar to the U.S. stores. (Sears Holdings failed in 2006 to buy the remainder of Sears Canada that it does not own because Bill Ackman took a 17.3 percent stake in it and prevented any takeover. He accepted to sell his stake at $30 a share on April 23, 2010.) Sears Holdings also owns 20 percent of Sears Mexico; Carlos Slim owns the other 80 percent. Like Target stores, Kmart-branded stores in Australia belong to Wesfarmers (which acquired former owners Coles Group in 2007); Wesfarmers also holds the rights to the Kmart brand in New Zealand.
In 2005, Sears Holdings sold a stake in hardware chain Orchard Supply Hardware to private equity firm Ares Management. On December 14, 2011, Sears Holdings announced that it would spin off its remaining holdings in Orchard Supply to shareholders effective December 30, 2011.
In November 2006, speculation rolled around as The Chicago Sun Times reported that Sears may buy Safeway, Home Depot, Gap, BJ's Wholesale Club, Radio Shack, Pep Boys, Anheuser-Busch or all seven companies.[6] The Washington Post, in a March 11, 2007, article, 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 was quoted as saying the company faced 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.
In 2007, the company placed its three major brands in KCD IP, a "separate, wholly owned, bankruptcy-remote subsidiary". KCD stands for the three brands: Kenmore, Craftsman, DieHard. KCD IP then issued $1.8 billion in bonds that were sold to Sears' insurance subsidiary based in Bermuda. Sears would thus pay KCD for use of the three brands' trademarks
On December 14, 2007, the company submitted a draft merger agreement to buy Restoration Hardware for $6.75 a share. Sears already owned 13.7 percent of the company.[9] That offer was withdrawn after Restoration's shares tumbled and a competing bid from private equity firm Catterton Partners was lowered to $4.50 per share. On February 28, Sears Holdings made an offer of $4.55 a share.
In June 2008, Sears launched Servicelive.com, which was intended to connect Sears customers with local contractors for home improvement projects. The site charges 10 percent of the contract price for each completed service, and offers more than 40,000 contractors. Servicelive.com was redesigned in March 2010.
On February 22, 2010, the Sears Automotive business launched a new Independent Sears Auto Center franchise program that offers automobile dealers the opportunity to operate licensed Sears Auto Centers. The Coleman Auto Group of East Windsor, New Jersey, is the first dealership and is expected to open a Sears auto center in March 2010.
The company has faced consistent quarters of decline since the merger of Sears, Roebuck, and Co. and Kmart Corp. Since 2005, the first year of results for the merged company, its income plunged 84 percent from $858 million, or $6.17 per diluted share. Eddie Lampert has held the title of chairman of Sears Holdings over the period of decline. The first quarter of 2011 did not appear any better, with the company posting a net loss of $170 million, or $1.58 a share, for the quarter ended April 30. Some industry analysts feel the heart of the problem is Eddie Lampert's "penny-pinching" cost-savings by stifling investment into stores. Instead the company has been buying back stock and increasing its presence online.
On December 27, 2011, after poor holiday sales, the company announced 100 to 120 Sears and Kmart stores would close.
On February 23, 2012 Sears Holdings Corp. announced it is closing all nine "The Great Indoors" stores
