Solid D
11-17-2004, 11:36 AM
http://money.cnn.com/2004/11/17/news/fortune500/sears_kmart/index.htm?cnn=yes
Kmart buying Sears
Consumers could be getting mall-based alternative to discounters in $11 billion merger deal.
November 17, 2004: 11:25 AM EST
By Parija Bhatnagar, CNN/Money staff writer
NEW YORK (CNN/Money) - Kmart is buying Sears, Roebuck & Co. for $11 billion in a deal that will marry two of the nation's oldest but troubled retailers into the No. 3 retail chain.
The deal, announced by the retail chains Wednesday morning, is meant to merge the best of both companies' brands.
Kmart's strength is clothing and home accessories, with such brands as Thalia Sodi, Jaclyn Smith, Joe Boxer and Martha Stewart Everyday products.
Sears' has long been known for its Craftsman tools and Kenmore appliances, and while it's struggled in clothing and other 'soft' lines, it bought Lands' End, and the youth-oriented Apostrophe brand, to try to fill those holes.
For consumers, the deal means being able to get appliances and other hard goods at Kmart and more clothing at Sears.
Sears' biggest strength is in home appliances, where it's still No. 1, despite a declining market share, according to Marshal Cohen, chief retail analyst with market research firm NPD Group.
The new company will continue to operate with both Sears and Kmart stores but "several hundred" Kmarts will be converted to Sears, Sears Chairman Alan Lacy said.
The companies currently operate about 3,500 stores combined.
"We'll have work to do ahead converting Kmart stores into Sears where appropriate and (to) bring some of Sears' products into Kmart. The idea is to make the stores more competitive while staying focused on the customer," Kmart chairman Edward Lampert said at a news conference .
"Kmart never had appliances and had no reputation for service," said Kurt Barnard, an independent retail analyst. "That's an honor that belongs to Sears. And Kmart has a reputation for low prices, which Sears never has had."
"Imagine going into Kmart and buying a Sears Craftsman tool set, or buying Kmart's Martha Stewart home products at Sears," said Cohen. "To Kmart shoppers, Lands' End may not mean anything, but now it will."
But Barnard and others said that even the combined company will face a challenge in competing with the more successful names in retailing, and that store closings were also likely.
The merger should help the new company compete against Wal-Mart Stores (Research), the world's largest retailer and an aggressive discounter, as well as Home Depot (Research), the home improvement chain that ranks as the country's No. 2 retailer overall, and Target (Research), which will lose its place as No. 3 to the combined Sears-Kmart.
Investors applauded the deal. Sears (up $10.00 to $55.20, Research) stock soared 22 percent while Kmart jumped about 17 percent in late morning trading.
The new company will be known as Sears Holdings and be based at Sears headquarters outside Chicago. But both names will continue to be used on stores.
---------------------------------------------------------------------------------- With CNN/Money senior writer Chris Isidore
Kmart buying Sears
Consumers could be getting mall-based alternative to discounters in $11 billion merger deal.
November 17, 2004: 11:25 AM EST
By Parija Bhatnagar, CNN/Money staff writer
NEW YORK (CNN/Money) - Kmart is buying Sears, Roebuck & Co. for $11 billion in a deal that will marry two of the nation's oldest but troubled retailers into the No. 3 retail chain.
The deal, announced by the retail chains Wednesday morning, is meant to merge the best of both companies' brands.
Kmart's strength is clothing and home accessories, with such brands as Thalia Sodi, Jaclyn Smith, Joe Boxer and Martha Stewart Everyday products.
Sears' has long been known for its Craftsman tools and Kenmore appliances, and while it's struggled in clothing and other 'soft' lines, it bought Lands' End, and the youth-oriented Apostrophe brand, to try to fill those holes.
For consumers, the deal means being able to get appliances and other hard goods at Kmart and more clothing at Sears.
Sears' biggest strength is in home appliances, where it's still No. 1, despite a declining market share, according to Marshal Cohen, chief retail analyst with market research firm NPD Group.
The new company will continue to operate with both Sears and Kmart stores but "several hundred" Kmarts will be converted to Sears, Sears Chairman Alan Lacy said.
The companies currently operate about 3,500 stores combined.
"We'll have work to do ahead converting Kmart stores into Sears where appropriate and (to) bring some of Sears' products into Kmart. The idea is to make the stores more competitive while staying focused on the customer," Kmart chairman Edward Lampert said at a news conference .
"Kmart never had appliances and had no reputation for service," said Kurt Barnard, an independent retail analyst. "That's an honor that belongs to Sears. And Kmart has a reputation for low prices, which Sears never has had."
"Imagine going into Kmart and buying a Sears Craftsman tool set, or buying Kmart's Martha Stewart home products at Sears," said Cohen. "To Kmart shoppers, Lands' End may not mean anything, but now it will."
But Barnard and others said that even the combined company will face a challenge in competing with the more successful names in retailing, and that store closings were also likely.
The merger should help the new company compete against Wal-Mart Stores (Research), the world's largest retailer and an aggressive discounter, as well as Home Depot (Research), the home improvement chain that ranks as the country's No. 2 retailer overall, and Target (Research), which will lose its place as No. 3 to the combined Sears-Kmart.
Investors applauded the deal. Sears (up $10.00 to $55.20, Research) stock soared 22 percent while Kmart jumped about 17 percent in late morning trading.
The new company will be known as Sears Holdings and be based at Sears headquarters outside Chicago. But both names will continue to be used on stores.
---------------------------------------------------------------------------------- With CNN/Money senior writer Chris Isidore