Sears to Explore Options for Kenmore, Craftsman, DieHard Brands as Q1 Loss Rises
Posted on May 26, 2016 by
HOFFMAN ESTATES, Ill.—Sears Holdings has begun to consider alternatives for its Kenmore, Craftsman and DieHard brands, as well as its Sears Home Services business, as its first quarter yielded a loss of $471 million, compared to a $303 million net loss in last year’s first quarter.
The options for the brands and the home services business could include partnerships that could expand them beyond Sears and Kmart stores, said Rob Schriesheim, Sears Holdings’ executive vice president and chief financial officer, on a prerecorded conference call discussing the first-quarter results. Schriesheim did not say whether a sale of the brands is one of the options the company is exploring.
“These iconic brands are beloved by the American consumer, and we believe the recent performance of Sears and Kmart have impeded their ability to grow,” Schriesheim said. “These brands have substantial potential, and we believe that exploring alternatives is the right approach to create longterm value.” In its statement detailing the first-quarter results, Sears Holdings said it has retained Citigroup Global Markets and LionTree Advisors to help the company determine the best choice for the brands.
The increased net loss stemmed from an 8.3 percent decline in revenues, which totaled $5.4 billion in the quarter, which ended April 30. Same-store sales dropped 6.1 percent, with same-store sales at Sears stores falling 7.1 percent and comparable-store sales at Kmart declining by 5 percent. Home appliances were among the weakest performers at Sears, while home at Kmart also turned in laggard sales.
Gross margin for the corporation as a whole fell 399 basis points to 21.8 percent. Selling and administrative expenses were cut by 10.6 percent in dollars and 72 basis points as a percentage of sales, to 27.9 percent.
Looking ahead, Edward Lampert, Sears Holdings’ chairman and CEO, said, “We remain focused on restoring Sears Holdings to profitability by concentrating on our best stores, our best members and our best categories through innovative solutions leveraging our Shop Your Way membership program and our Integrated Retail offerings.”
The company also said Schriesheim will leave his post as chief financial officer “to focus on his other business interests and pursue other career opportunities,” according to the company statement. He will remain until a successor is chosen and will then serve in an advisory capacity until Jan. 31, 2017.