Sears explores brands as buoy

Losses go on; execs look at options for Kenmore, others

In this Thursday, May 17, 2012, file photo, shoppers walk into Sears in Peabody, Mass. Sears' announced Thursday, May 26, 2016, its fiscal first-quarter loss widened as it suffered another sales drop at its Kmart and namesake stores.
In this Thursday, May 17, 2012, file photo, shoppers walk into Sears in Peabody, Mass. Sears' announced Thursday, May 26, 2016, its fiscal first-quarter loss widened as it suffered another sales drop at its Kmart and namesake stores.

NEW YORK -- Long-struggling Sears Holding Corp. is looking to leverage its strongest brands, such as Kenmore and Craftsman, to help sustain itself as it posted another quarterly loss Thursday and reported sales declines at its Kmart and Sears stores.

Chain executives said they are looking at options for Sears' prized brands that also include DieHard and Sears Home Services. They are exploring possible partnerships or deals that could expand the brands' distribution and service offerings. In a statement Thursday, the officials gave no specifics but said they believe the Kenmore, Craftsman and DieHard brands can grow significantly with an expanded presence outside of Sears and Kmart.

With the company's stores showing little sign of any revival, Chief Executive Officer Edward Lampert is said to be considering selling off parts of the company to raise cash. Lampert -- a hedge-fund manager who's also the retailer's chairman and largest shareholder -- already has spun off the Sears Hometown and Outlet Stores business and Lands' End clothing brand. He also sold some stores and moved others into a real estate investment trust.

The company will "aggressively" evaluate all alternatives for the businesses and has hired Citigroup Inc. and LionTree Advisors to assist in the efforts, the statement said Thursday.

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 statement said. Also, the home-services business "has greater potential than what we have delivered in the past."

Other major department stores, such as Macy's, Kohl's and J.C. Penney, also saw sales decline in the latest quarter as they wrestle with changes in shopping preferences. Americans are making their purchases online and spending more on experiences like eating out rather than buying new clothes. And when shoppers do buy clothes, it's often at discounters such as T.J. Maxx.

But Sears fared far worse in its first quarter, and analysts put much of the blame on the company itself. Sears Holdings Corp., based in Hoffman Estates, Ill., has struggled for years with weaker sales, unable to keep up with companies that sell appliances, like Home Depot, or general merchandise, like Wal-Mart, or everything, like Amazon.com.

Sears saw declines in appliance sales, where its Kenmore brand and others are an established presence, even as other retailers reported increases from an improving home market. That, said Neil Saunders, CEO of the research firm Conlumino, highlights Sears' main issue: "It has fallen out of favor with American shoppers who continue to abandon the chain at a fairly alarming rate."

Lampert has pledged to investors that a turnaround is coming, but it has yet to happen. Sears has been selling assets to raise cash and accelerating store closures. In April, it said it would close another 68 Kmarts and 10 Sears stores. That accounts for close to 5 percent of its nearly 1,700 stores. In 2011, it operated 4,000 stores.

In Arkansas, Sears recently announced the closing of its long-standing store on South University Avenue in Little Rock. With that closing, Sears will have one store in central Arkansas, at McCain Mall in North Little Rock.

The closures come as Sears tries to shift its focus from running a store network to a members-focused business. Loyal shoppers receive incentives to buy, but those efforts haven't gained much traction with consumers.

For the quarter that ended April 30, sales at U.S. Kmart stores that have been open for at least a year fell 5 percent. At Sears stores, sales dropped 7.1 percent. Such sales are a key gauge of a retailer's health because they exclude results from stores recently opened or closed.

The decreases were fueled by sales declines in home appliances, clothing, consumer electronics, footwear and Sears Auto Centers. Lampert said Thursday that clothing sales continue to be hurt by heavy promotions from competitors.

Sears posted a loss of $471 million, or $4.41 per share, for the quarter. A year earlier, it lost $303 million, or $2.85 per share. Removing certain items, the chain lost $1.86 per share. Revenue declined to $5.39 billion from $5.88 billion.

The company also announced that Chief Financial Officer Robert Schriesheim plans to leave the company but will stay until a replacement is found. He will remain an adviser to Sears through January 2017.

Information for this article was contributed by Michelle Chapman and Anne D'Innocenzio of The Associated Press; and by Lauren Coleman-Locher of Bloomberg News.

A Section on 05/27/2016

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