21 Jan, 2008, 0355 hrs IST, Bloomberg
WASHINGTON: Sears Holdings, the owner of Kenmore appliances and the Mart and Sears retail chains, will appoint executives to run each of its business lines after saying profit may decline for a third straight quarter.
Each unit’s performance will have a designated leader and a group of executive advisers to oversee performance, Sears spokesman Chris Brathwaite said Saturday in a e-mail. He didn’t give details on what each division would do. The company has Lands’ End clothing stores and sells Craftsman tools and DieHard batteries at the Sears and Kmart chains.
The decision follows Sears’s disclosure last week that fourth-quarter profit may drop by more than 50% after US holiday sales fell. The biggest US department store company has reported declining sales in stores open at least a year every quarter since chairman Edward Lampert combined Kmart and Sears, Roebuck in March 2005.
Sears, which declined 39% last year in Nasdaq Stock Market trading, will give “greater control, authority and autonomy” to the individual businesses, Brathwaite said in the statement.
Since putting the retailer together, Lampert has centralised functions, giving executives responsibilities that stretched across the company. The marketing chief for the Sears brand, for instance, reports to Sears Holding chief marketing officer Maureen McGuire. The retailer, which blamed increased competition and “unfavourable economic conditions” for the drop in fourth-quarter profit, posted declines in the second and third quarters, with third-quarter net income declining 99%.
Corwin Yulinsky, executive vice-president of customer strategy, and Senior vice-president Dev Mukherjee briefed executives on the plans on January 17, the Wall Street Journal said Saturday. Lampert, 45, has tried to lure customers by extending products over the whole organisation, adding Lands’ End clothing to Sears stores and Craftsman tools at Kmart.
He boosted technology investments and introduced advertising campaigns this year for both chains while telling shareholders at the company’s annual meeting in May that fixing retail was ‘a priority’. analysts say he’s underinvested in the stores for too long.
“Once people decide they’re not going to shop there anymore, it’s hard to get them to come back,” Jon Fisher, a portfolio manager with Fifth Third Asset Management, said January 14. His firm manages $22 billion in assets, including Sears stock.
The retailer has also lost a senior executive, chief customer officer John Walden, who is no longer with the company after a year at Hoffman Estates, Illinois-based Sears, Brathwaite said.
Of the seven analysts that cover the 122-year-old Sears, only one has a ‘buy’ recommendation, while four advocate selling the shares, according to data compiled by agencies. The remainder advise holding the stock.
Lampert’s ESL Investments bought Kmart debt during the discount chain’s bankruptcy and became its largest shareholder after the retailer’s emergence from court protection in May 2003. Lampert engineered Kmart’s $12.3 billion acquisition of Sears, Roebuck less than three years later to form Sears Holding. His funds hold 48% of the company, according to agencies data.
Sears gained 29% in the eight months after Lampert said in August 2006 that the company may make acquisitions outside the retail industry, sparking speculation that he would run the Sears like a hedge fund. Further sales declines have weighed on the shares since April.
Sears, which rose 50 cents in Nasdaq trading Saturday to $89.43, has fallen 12% this year. Analysts on average predict Sears shares will decline to $74.75 in the next 12 months, according to data.
