Sears; FashionUnited news

Sears lashes out at sceptics

Sears Holdings's chairman Eddie Lampert lashed out at sceptics when the company reported quarterly earnings had exceeded expectations. Lampert, who was responsible for the $11 billion takeover of Sears by K-Mart in March of this year, advised shareholders to ignore “so-called expert views” on the expectations for the combined company, saying that “most observers and financial pundits” had not predicted the turnarounds of companies like American Express, IBM and JC Penney.

In a statement, he said that analysts' success was “dependent on the excitement or controversy generated by their articles – not on the accuracy of their writing or of their predictions”.

Net profits for the third quarter were $58 million (£33.3 million), or 35 cents a share, up from forecasts of 32 cents a share. Meanwhile, same store sales fell 2.8 percent due to poor performance in home goods. However, thanks to less discounting, margins expanded.

Lampert said the introduction of Sears products such as Kenmore appliances and Craftsman tools, to Kmart stores was helping to boost sales. “While we are clear on our vision, we recognise the importance of being flexible and quick to change if the situation warrants,” said Lampert, who took over more responsibility of day-to-day control of the combined company in September.

He admitted that customers had “not yet embraced the new, more fashion-forward brands” of clothing. The company is looking to centralise its merchandising staff and is looking for a “chief merchant” and an executive to run the clothing business.

Wall Street analysts told the Financial Times that they were encouraged by “solid” results.

www.sears.com
6 December 2005

Sears hires non-retailing talent

Following the sudden departure of Luis Padilla, president and chief merchandising officer of Sears, the third largest US retailer has announced the appointment of two senior executives to head up its marketing division. The company gave no reason for Padilla's departure, which he joined just over a year ago from rival Target. Chairman Eddie Lampert last month announced his intention to take control of merchandising, design and Sears' online businesses, which resulted from the $12.3 billion takeover of Sears, Roebuck by Kmart earlier this year. He also said that he would take the initiative to increase the company's responsiveness to its customers.

Sears has now looked beyond the borders of classic retailing for new talent and has hired Maureen McGuire, a former IBM marketing executive, as chief marketing officer. She will oversee the retailer's Sears and Kmart stores as well as its catalogue and online sales. The company has also hired Corwin Yulinsky, a former McKinsey consultant with a background in retail financial services, as executive vice president, customer strategy and insight. In this capacity, Yulinsky will oversee customer relationship management and financial services.

“With these announcements, we are well on our way to putting in place the team that will help lead the changes…necessary to more quickly and fully meet the needs of our customers and earn their trust,” said Lampert. He also said that McGuire and Yulinsky would “help lead the on-going change in Sears' culture” since the merger of Sears, Roebuck and Kmart. The company said that it was currently searching for a replacement for Padilla. In the meantime, senior merchants in the retailer's home and apparel businesses will report directly to Lampert.

www.sears.com
20 October 2005

Sears management overhaul

Investor and chairman of Sears Holdings, Edward Lampert, is going to take a more formal role in the running of the US third largest retailer. The company announced yesterday that he will take control of merchandising, design and the online businesses.

Sears also announced that the former chief executive of Kmart, Aylwin Lewis, will take over the role of chief executive of the merged group of Sears Roebuck – which was taken over by Kmart for $12.3 billion (£6.74 billion) – from Alan Lacy. The latter will continue as vice chairman, focusing on “merger integration and strategic issues” together with Lampert.

In a statement, Lampert said that the changes were implemented in order to achieve “greater clarity in our operating management” and that Lacy “will continue to make substantial contributions” to the group.

Analysts were not surprised by the announcement. Lewis is known to have more direct retail experience than Lacy, who is a former head of Sears' credit card business.

Sears also announced net profits of $161 million, up from $110 million for the combined results of the the two separate companies last year. Kmart stores reported a record quarterly sales performance since it declared bankruptcy in 2002. Clothing sales rose, while comparable sales fell 0.3 percent due to lower transaction volumes. Meanwhile, Sears' sales dropped 7.4 percent as a result of a cut in inventory and in promotional events.

“Today we saw more baby steps on the road to cash flow, versus the home runs we used to see at Kmart,” said Gary Balter, retail analyst at CSFB. He was referring to Lampert's remarkable turnaround of Kmart, which he managed to take out of bankruptcy.

Lampert has said that his strategies for Sears include “opportunistically” pursuing acquisitions. The company had approximately $2 billion at the end of the quarter with which to do this.