Wednesday, June 02, 2004

what's next for Sears, Kmart (FAQ)

Q. Will some stores close?
A. Yes. Sears and Kmart execs will look at the combined company's 3,500 stores with an eye to sell off or lease "non-strategic" locations. That could be less-attractive stores, or possibly even mall anchors that would fetch a better price from another chain.

Q. What about Sears' Hoffman Estates (IL) headquarters?
A. Hoffman Estates will be the home of the merged operations.

Q. Will there be layoffs?
A. "There will be some head count changes that come out of this," said Edward Lampert, chairman of the combined company. He offered no details, but most pink slips are likely to come when stores are closed, and in consolidating Sears' Hoffman Estates and Kmart's Michigan headquarters.

Q. Will Kmart stores convert to Sears stores?
A. The two chains will remain separate operations. But Sears wants to add many more off-the-mall locations, like its Sears Grand stores. And Kmart is where it will find them.
Already Sears plans to convert 50 Kmart stores to the Sears brand by April, part of a separate deal it made for the stores in September.
A half-dozen Wal-Mart stores are part of the Sears off-mall expansion, too. Today Sears Chief Executive Alan Lacy said the Pekin, IL store would be the model for how the new Sears stores would look.

Q. Will some Sears stores turn into Kmarts?
A. It's less likely that Sears will go Kmart. Lampert said Kmart doesn't make sense as a mall anchor. It's going to be on a "store-by-store basis," he said.

Q. Will I be able to be able to buy Craftsman tools at Kmart?
A. Executives said the two chains would "cross-merchandise" at each other's stores. That could include not only Craftsman but Kenmore appliances--already sold at Sears' Great Indoors home centers --and DieHard batteries. All three were identified in the merger announcement as "key" brands. Sears also owns the Lands' End, Covington and Apostrophe clothing lines, which might make sense in Kmart's apparel-heavy mix.

Q. Will Martha Stewart show up at Sears?
A. Martha Stewart herself is out of circulation for a while, but her home furnishings line is a good bet for Sears. It already sells Martha Stewart Everyday goods in Canada, and her brand of paint is featured at the Great Indoors.
Sears likely would have to work out a deal with Stewart's company, but her company's stock is already rising on the prospect of more Martha at more stores.
The announcement specified that Kmart would continue selling not only Martha Stewart Everyday, but also its Joe Boxer, Jaclyn Smith, Route 66, Thalia Sodi and Sesame Street items.

Q. So, will Sears look more like Kmart or Kmart look more like Sears?
A. A little of both. The Sears Grand stores, which have groceries and other everyday items, are already closer to the Kmart mix, and some items like home electronics have done so well there that mall stores have expanded their offerings. Kmart also does some things like pharmacy and health-and-beauty aids that Sears may add.
Sears wants to keep itself as a step up from discounters like Kmart, but there's a lot of room for Sears to steal market share from the likes of Target and Wal-Mart.

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