Most Recent Articles In Fashion Features
Latest Fashion Features Articles
- Inside the Garden Scene at Chanel Couture
- Ximon Lee Scoops H&M Design Award
- Paris Couture Spring 2015
More Articles By
In a deal that reshapes America’s retail scene, Kmart Holding Co. said Wednesday that it will buy Sears, Roebuck & Co. for $11 billion, creating the nation’s third-largest retailer with $55 billion in sales. The company will be based in Hoffman Estates, Ill., and operate 2,350 full-line and off-the-mall stores, and 1,100 specialty stores.
The deal also turns Edward Lampert, the financier behind it, into one of the industry’s major powerbrokers. Lampert — who took Kmart out of bankruptcy in 2003 with an investment of less than $1 billion and owns 15 percent of Sears — will become chairman of the new group and his firm, ESL Investments, will end up with a 42 percent stake in Sears Holdings. Lampert alone made an estimated $1 billion on the deal by breakfast time on Wednesday.
Sears’ top brands are Kenmore, Craftsman and DieHard. Kmart’s proprietary brands include Martha Stewart Everyday, Joe Boxer, Thalia Sodi, Jaclyn Smith, Route 66 and Sesame Street.
The merger will generate $500 million of annualized cost and revenue synergies, but will create a company that is still only a fifth the size of Wal-Mart Stores. Observers also were skeptical Wednesday as to the logic behind the purchase and the long-term future of the merged entity. Some described it simply as a real-estate deal benefiting Lampert, while others pointed out that both Kmart and Sears have struggled in recent years to carve out strong niches in the mass and moderate department store sectors. They questioned whether the combination will, in the end, create a viable retailer.
Lampert said the merger was the taking of the “best of both the Kmart team as well as the Sears team, converting Kmart stores to Sears where appropriate and bringing Sears product to Kmart.” He described the merger as a blending of the two “into one culture, an operation under one culture [with] two brand names,” and a retail operation that is very “customer-focused.”
As for converting the store base from one nameplate to another, Lampert said: “This is a great opportunity to explore commutations and permutations.”