Sears Holdings

Sears Holdings Corporation
Public
Traded as NASDAQ: SHLD
Industry Retailing
Founded March 24, 2005 (March 24, 2005)[1]
Headquarters Hoffman Estates, Illinois, U.S.
Area served
  • United States
  • Canada (through minority stake in Sears Canada)
  • Mexico (through 50% stake in Sears Mexico)
  • Puerto Rico
  • Guam
Key people
Edward Lampert
(Founder, Chairman & CEO)
Revenue Decrease US$ 22.138 B (2016)[1]
Decrease US$ −1.978 B (2016)[1]
Decrease US$ −2.221 B (2016)[1]
Total assets Decrease US$ 9.362 B (2016)[1]
Total equity Decrease US$ −3.824 B (2016)[1]
Number of employees
140,000 (2017)[1]
Subsidiaries
  • Sears
  • Kmart
  • KCD IP
  • Shop Your Way
  • MetaScale
  • Fit Studio
  • A&E Factory Repair
Website searsholdings.com

The Sears Holdings Corporation is an American holding company headquartered in Hoffman Estates, Illinois, a suburb of Chicago. It is the owner of retail store brands Sears and Kmart, and was founded after the latter purchased the former in 2005.[2] Sears Holdings also owns the brands Kenmore and DieHard. A sale of Craftsman to Stanley Black and Decker occurred in March of 2017. Sears retains the rights to sell Craftsman tools for 15 years from the date of sale through the purchase of tools from their established suppliers. Sears Holdings operates 1,503[1][3][4] retail locations under the mastheads of Sears, Kmart, and their subsidiaries, such as auto centers and pharmacies, in all 50 states, Puerto Rico, and Guam. As of 2014, it is the 18th-largest retailing company in the United States.[5]

History

Founding

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, emerging Kmart from Chapter 11 bankruptcy protection, 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 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 percent stock and 45 percent 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.

2000s

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 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 currently owns 51 percent of Sears Canada,[6] a large department store chain in Canada similar to the U.S. stores. At one point it owned as much as 92% of the Canadian company,[7] but it failed in 2006 to buy the remainder of Sears Canada that it did 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.[8]

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, and Anheuser-Busch.[9] 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.[10]

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.[11]

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.[12] 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.[13] In 2010, Dennis Stemmle was appointed president of the division.

2010s

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.[14]

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.[15] 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.[16]

On December 27, 2011, after poor holiday sales, the company announced 100 to 120 Sears and Kmart stores would close.[17]

On February 23, 2012 Sears Holdings Corp. announced it is closing all nine "The Great Indoors" stores.[18]

On December 6, 2013 Sears Holding Corp. announced that it will spin off Lands' End catalog business as a separate company by distributing stock to the retailer's stockholders.[19] Lands' End stock began trading on the NASDAQ on April 7, 2014.[20]

Sears Holdings is planning to spinoff 235 of its properties into a new REIT. The REIT will be called Seritage Growth Properties. The package of properties is backed by a $925 million loan from JP Morgan Chase Bank. The 235 properties amount to a total of 37.1 million square feet of space. The stores are mainly Sears and Kmart locations spread across the country and Puerto Rico.[21] The strategy of department stores converting their real estate holdings into REITs has been well-used in the current commercial real estate environment.[21]

In May 2016, Sears Holdings announced that it was seeking strategic alternatives for its house brands to increase their revenue, including expanding their presence outside of Sears and Kmart. The filing stated that "by evaluating potential partnerships or other transactions that could expand distribution of our brands and service offerings, we can position both businesses to achieve greater success."[22]

In late 2016 and early 2017, some significant steps were taken by Edward Lampert, president, chief executive officer and top shareholder of Sears Holding Corp. Lampert, with personal assets estimated at $2 billion, is also the founder and manager of the hedge fund ESL Investments Inc.[23] He provided an additional loan of $500 million to the company and said he would provide letters of credit to Sears for additional amounts, reportedly totaling $200 million and possibly increasing to a half billion dollars in the future.[24]

During this period, the company announced that it would close 150 stores (109 Kmart and 41 Sears outlets), in an attempt to cut its losses after a decline in sales of 12 to 13 percent during the holiday shopping season and the largest quarterly loss since 2013.[25] On January 9, 2017, Sears announced that it had reached an agreement to sell the Craftsman brand to Stanley Black & Decker for $900 million, plus royalties on new Craftsman sales for a 15-year period. During this period, Sears will continue selling Craftsman products royalty-free under a licensing agreement.[26]

As part of an effort to extend the brand, Sears launched a pilot location in San Antonio for a DieHard-branded auto service franchise, DieHard Auto Center driven by Sears Auto. The brand is intended to operate as a standalone version of the Sears Auto Center locations attached to Sears department stores; the location was chosen because it was in proximity to a Sears location that had closed.[27]

Corporate affairs

Subsidiaries

Current

An older Sears exterior with newer signage.

Former

Exclusive brands

  • Adam Levine Collection – women's and men's clothing and accessories
  • Alphaline – television accessories & wall mounts, headphones, cables & cases, and formerly Wii accessories
  • Attention – branded misses clothing and jewelry
  • Bongo – branded teen clothing
  • Canyon River Blues – branded clothing for all
  • Celestial Star – branded International Gemological Institute-certified diamond fine jewelry
  • Companion – tools (economy tools, non-lifetime warranty)
  • Covington – branded men's and misses clothing and footwear
  • DieHard – auto, marine, tractor batteries and work boots
  • Dream Out Loud; teen clothing collection by actress Selena Gomez
  • Dunlap – discontinued economy-priced tool brand
  • Easy Living – interior paint, primers, and accessories (not sold anymore)
  • Evolv – tools (economy tools, limited warranty)
  • Galaxy – branded discount appliances
  • Hydro-Glass – jet pumps
  • Kenmore – appliances and TVs
  • Kardashian Kollection (2012)
  • Kromedge (1955–1991) – tools with super-hard chrome plating
  • J.C. Higgins (1907–1964) – discontinued sporting-goods brand (not to be confused with JCPenney)
  • Jaclyn Smith – branded clothing and home decor
  • Joe Boxer – branded underwear and home decor
  • Latina Life – branded misses clothing and jewelry
  • LXI – discontinued electronics brand
  • MAPP – gas torch kits
  • Muzzler – car mufflers
  • Parallel – branded misses clothing
  • PENSKE – automotive testing equipment, automotive filters and parts
  • Personal Identity – branded juniors clothing
  • Promise Your Love – branded diamond fashion, diamond bridal, and lab created pink sapphire and ruby fine jewelry
  • Protron – branded discount electronics
  • Route 66 – branded clothing
  • Sears – Sears-branded tools and automotive parts
  • Sears-O-Pedic – high end mattresses made by Serta
  • Sears Tires – includes The Road Handler, Guardsman, Dynaglass, DynaPly, Silent Guard, Sears Crusader, Dyna-Sport, Superwide
  • Sesame Street – branded clothing
  • Simply Love – branded diamond solitaire fine jewelry
  • Smart Sense - grocery brand
  • The SteadyRider – automotive shock absorbers
  • Structure – branded young men's clothing (label originally part of what is now the Express chain, purchased by Sears in 2003)
  • Ted Williams Brand (1961–1970s) – sporting and recreation goods
  • Thom McAn shoes
  • Toughskins – branded clothing
  • Two Hearts – branded maternity clothing
  • Ty Pennington style // sTYle – home decor
  • Weatherbeater – exterior paint, primers, and accessories (not sold anymore
  • Winnie the Pooh – branded children's clothing

Sponsorships

The company sponsors, through the Sears Auto Centers, the Formula Drift Darren McNamara Sears/Falken Saturn Sky drift car. It sponsored the NASCAR Truck Series, using the Craftsman brand as the title sponsor, from the series' inception in the 1995 NASCAR SuperTruck Series presented by Craftsman to the 2008 season, when the agreement ended.[40] Craftsman tools remain the official tools of NASCAR. The company sponsored the television series Extreme Makeover: Home Edition. It sponsors and currently has naming rights to the Sears Centre, an 11,000-seat multi-purpose family entertainment, cultural and sports center, constructed in 2006 and location in Hoffman Estates. The company also sponsored the PBS television series Mister Rogers' Neighborhood, under the name The Sears-Roebuck Foundation from 1968 until 1991. It 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 its Sears Auto Center branch. However, Riggs failed to qualify for the event. In 2016, Craftsman became the title sponsor of the World Racing Group, World of Outlaws Sprint car racing series.[41]

Diversity

Controversy

Havas Media

Kmart was the target of an Industrial Workers of the World (IWW) campaign in 2009 to get the company to stop advertising with Havas Media (called Media Planning Group at the time). In 2009, Havas Media laid off 50 of their 460 U.S. employees (approximately 11%), despite the company posting increasing profits. The IWW accused Havas Media of "[putting] extra money in their pockets"[43] and called for Kmart to stop using Havas Media until a fair severance package for the terminated employees could be negotiated. To put further pressure on Kmart, the union protested outside of Kmart stores, including one store located on Astor Place in Manhattan.[43] Sears Holdings has not commented publicly about the matter.

See also

References

  1. 1 2 3 4 5 6 7 8 9 10 11 "2015 Form 10-K, Sears Holding Company" (PDF). Sears Holdings.
  2. Barbash, Fred; Barbaro, Michael (November 17, 2004). "Sears, Kmart To Merge in $11B Deal". The Washington Post. Retrieved May 23, 2010.
  3. 1 2 3 "Document". www.sec.gov. Retrieved 2017-02-07.
  4. "Sears future may include slimmed down stores". Chicago Tribune. Retrieved 2015-12-13.
  5. . National Retail Federation.
  6. "Are Sears Canada's days numbered? Poor results could have U.S. retailers circling soon".
  7. . BusinessWeek.
  8. "Sears Holdings Press Releases". Searsholdings.com. Retrieved 2012-03-08.
  9. "Sears May Have Eye on Safeway". Chicago Sun-Times.
  10. "Risky Side of Sears: Retailer Is Recast as a Hedge Fund, as Sales and Stores Decline, Chairman Focuses on Investment"]. The Washington Post. March 11, 2007.
  11. "The New Alchemy At Sears". BusinessWeek. April 16, 2007. Retrieved 4 August 2011.
  12. "Sears Takes 13.7% Stake in Restoration Hardware". finanznachrichten.de.
  13. Much, Marylin (March 18, 2010). "Sears Updates Its Online Marketplace ServiceLive.com". Investor's Business Daily. Retrieved April 13, 2010.
  14. "Sears Starts Auto Center Franchise Program". February 22, 2010. Retrieved February 23, 2010.
  15. "'Twin Titanics' or Turnaround – Which Way Are Sears and Kmart Headed?". May 5, 2011. Retrieved May 30, 2011.
  16. Jones, Sandra M. (May 19, 2011). "Sears Holdings Posts $170 Million Loss in 1st Quarter". Chicago Tribune. Retrieved May 30, 2011.
  17. "More than 100 Sears, Kmart stores to close". News & Record. Associated Press. 2011-12-27. Retrieved 2011-11-27.
  18. 1 2 Sandra M. Jones. "Sears closing all nine Great Indoors stores". Chicago Tribune. Retrieved 23 February 2012.
  19. Hadley Malcolm, "Sears to spin off Lands' End business," USA Today, December 6, 2013.
  20. Associated Press, "Lands' End Starts Trading as Public Company," ABC News, April 7, 2014.
  21. 1 2 "Sears Retains Right To Exit Nearly Half of its Store Space in REIT Spinoff - CoStar Group". www.costar.com. Retrieved 2015-12-13.
  22. "Sears brand expansion: It seeks DieHard jolt, hopes to clean up with Kenmore". Chicago Tribune. Retrieved 22 February 2017.
  23. Forbes. Forbes. January 9, 2017 http://www.forbes.com/profile/edward-lampert/. Retrieved January 9, 2017. ...took over as Sears CEO in 2013 ... has presided over a remarkable dismantling. Missing or empty |title= (help)
  24. Sweeney, Brigid (January 5, 2017). "With Craftsman sale, Sears takes another step toward the grave". Crain's Chicago Business. Retrieved January 9, 2017. The company may need $2.5 billion in cash to get through 2017 amid sales declines and store closures, including almost $600 million in minimum pension contributions.
  25. Coleman-Lochner, Lauren (January 5, 2017). "Sears to Sell Craftsman, Shut 150 Stores as Lampert Raises Cash". Bloomberg. Bloomberg L.P. Retrieved January 9, 2017. Investors cheered the moves, sending Sears up as much as 8 percent to $11.19 in New York. The stock had slumped 55 percent last year as the company continued to post losses.
  26. Merced, Michael J. De La (January 5, 2017). "Sears Agrees to Sell Craftsman to Stanley Black & Decker to Raise Cash". The New York Times. Retrieved February 22, 2017.
  27. "Sears launches free-standing pilot DieHard Auto Center". Automotive News. Retrieved 22 February 2017.
  28. Kmart At A Glance
  29. "Online Grocery and household item delivery or pickup - mygofer.com". www.mygofer.com. Retrieved 2017-02-07.
  30. "Sears History". Searsmedia.com. Retrieved 2010-01-01.
  31. "News & Events - CF Toronto Eaton Centre".
  32. "Sears Grand Fact Sheet". Searsmedia.com. Retrieved 2009-07-17.
  33. "Sears Vacations Homepage". searsvacations.com. Retrieved 2016-03-29.
  34. "This Week in Consumer Electronics, "Whirlpool Bears First Fruits Of Maytag Merger At Home Depot". This Week in Consumer Electronics. October 9, 2006.
  35. 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. Yard and Garden. March 2005.
  36. "Profile: Lands End Inc".
  37. "Sears Essentials Fact Sheet". Sears.
  38. "Sears Ditches Sears Essentials Name". Crain's Chicago Business.
  39. "New Sears Outlet Store Opens in Queens Village". 2015-05-26. Retrieved 2015-06-03.
  40. "Craftsman Dropping Sponsorship of NASCAR Truck Series". The Kansas City Star. December 4, 2007.
  41. "World of Outlaws Craftsman Sprint Car Series - Sponsors".
  42. 1 2 Campaign, Human Rights. "Corporate Equality Index Archives | Human Rights Campaign". Human Rights Campaign. Retrieved 2017-02-07.
  43. 1 2 "False Advertising? MPG Lays Off Workers While Profits Grow". Industrial Workers of the World. 19 June 2009. Retrieved 3 January 2014.

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