Monday, March 20, 2006

I only go there for Craftsmen tools

The retail giant Sears is falling on hard times. Some stores have only a few shoppers during the day and, similar to U2, they don't always find what they're looking for.
Sears Essentials--the combination of Sears brands in former Kmart stores--was supposed to be the future of Sears Holdings Corp., the $55 billion retail Goliath formed by the March 2005 merger of Sears and Kmart. But as the one-year anniversary of the merger arrives, the outlook for Sears is dismal.

- At Sears' core chain of nearly 900 department stores, sales were down more than 8 percent in 2005 and plunged by 12 percent during the crucial holiday season.

- Sears Holdings' debt is rated "junk" by all three major rating agencies, a far cry from the A credit rating the old Sears earned for decades.

- Sears and Kmart are opening few new stores while competitors such as Wal-Mart unveil more than 300 new locations a year. (Chicago Tribune)

The merging of Kmart and Sears has not been as profitable as hoped. Also, it doesn't help that the Sears Holdings Chairman, Edward Lampert, sounds very mysterious - he's #61 in Forbes' list of the richest 400 Americans, he doesn't like to fly, he retires at 9:30 (even when guests are in his home), he's had very little retail experience but investors are confident in him.

We shall see what lies ahead for Sears. The contracts with Martha Stewart may come and go, but they better never get rid of Craftsmen.

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