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Sears Holdings

Sears seeks 'alternatives' for Kenmore, DieHard, Craftsman

Hadley Malcolm
USA TODAY

With its losses deepening, Sears (SHLD) is now "exploring alternatives" for some of its top brand names such as Kenmore appliances, DieHard batteries and Craftsman tools in a bid to get back to growth.

Sears continues to post poor sales results as it attempts to turn around its flailing business. It said in its earnings presentation that many of its stores "are larger than needed for today's technology-equipped consumer."

In releasing first-quarter results, Sears Holdings said it is "exploring partnership opportunities" for some of the household-name brands that it created over the years and wants to widen distribution of its home-repair outfit, Sears Home Services.

Reached for more detail, spokesman Howard Riefs mentioned possible licensing, a "strategic relationship" with another company and wouldn't rule out the possibility of selling one or more of the brands. "We believe that exploring alternatives for these businesses now is the right approach to create long term value and we believe that we can realize significant growth by further expanding the presence of these brands outside of Sears and Kmart," he wrote in an email.

Sears shares rose 6.5% to close at $13.34, up 82 cents, even through the earnings news itself was far from heartening. Sears said it lost $471 million compared to $303 million in the same quarter last year. Loss per share came to $4.41, or $1.86 adjusted for certain items. Analysts estimated a loss of $3.20 per share.

Focusing on appliances has been one of Sears' primary strategies in its attempt to regain profitability. Last week, it opened a store in Colorado entirely dedicated to appliances. But home appliances were one of the main categories that contributed to a sales decline at Sears' U.S. stores in the quarter.

As a result, some analysts weren't impressed. "Sears is like a strange roller coaster that only ever travels in one direction —  downward," said Neil Saunders, CEO of retail research firm Conlumino.

The report confirmed yet another woeful quarter for what was once an essential destination for American shoppers. Sears has failed to keep up with the changing nature of digital-era shopping and shopper behavior, closing hundreds of stores in recent years as it pares its business costs. Meanwhile, the company is relying heavily on its remaining real estate to raise cash to fund a transformation plan under CEO Edward Lampert.

Lampert wrote a lengthy letter in February in part blaming Sears' troubles on the advantage technology companies such as Uber and Amazon have with fewer overhead costs, or not having to charge sales tax.

In the report Thursday, Lampert blamed a highly promotional and competitive retail environment for the company's falling sales. Comparable store sales, a measurement based on non-store sales and sales at stores open at least a year, fell 5.9% across Sears and Kmart. Total revenue fell from about $5.9 billion to $5.4 billion, though that came in ahead of the $5.3 billion analysts expected, according to S&P Global Market Intelligence.

Part of the sales decline was due to fewer Sears and Kmart stores, as the company has closed dozens of locations. Last month, the company announced that 78 stores would close later this year, after already accelerating the closure of 50 stores at the start of the year.

The results come as Sears has taken on several strategic initiatives to regain its footing, including accelerating store closures and attempting to drive loyalty with shoppers through a membership program. The company acknowledged in an earnings presentation that many of its stores "are larger than needed for today's technology-equipped consumer." In that vein, it has been focused on building a more integrated business between digital and in-store services and more personalized marketing to customers.

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