Sears stock jumps in U.S. after deal with Amazon on appliances
Struggling retailer pumps new value into Kenmore line
Sears Holdings Corp. kicked off its biggest rally in almost two months after agreeing to sell its Kenmore appliances on Amazon. com, a reassuring sign for a retailer that’s been rattled by e-commerce upheaval.
In addition to offering the Kenmore lineup on Amazon’s site, Sears will integrate its smart appliances with Alexa — the tech giant’s speech-activated assistant. That means the company’s air conditioners and other devices will respond to voice commands.
The announcement brings fresh hope that Sears can adapt to a rapidly shifting retail landscape. Department-store chains have been hard hit by sluggish mall traffic and online shopping. By teaming up with Amazon, Sears brings new life to its more-than-century-old Kenmore name and opens up a new sales channel.
It is cold comfort to employees and pensioners of Sears Canada Inc. — partially spun off from Sears Holdings in 2012 — which went to court in June to seek protection from creditors. Liquidation sales at dozens of Sears Canada locations slated for closure could begin as early as this week after an Ontario court signed off on the plan Tuesday.
Sears Canada has been operating under court protection from creditors since June 22 when it announced its plan to shutter 59 stores and cut approximately 2,900 jobs.
The Amazon deal sent Sears’s shares up as much as 24 per cent to $10.76, the biggest intraday gain since May 25. The stock had been down 6.6 per cent this year through Wednesday’s close.
Shares of rival appliance sellers got hammered. Home Depot Inc., Lowe’s Cos. and Best Buy Co. all fell at least four per cent on Thursday, underscoring concerns that shoppers will start buying more large appliances on Amazon.
Terms of the partnership weren’t disclosed, and it’s unclear how much of a boost Sears will get from the arrangement. But the company is badly in need of growth. Once the world’s largest retail chain, Sears has racked up more than $10 billion in losses over the past six years.
Sears’s flagship chain also has voiced concerns about its outlook this year. The company added so-called going-concern language to its annual report filing in March, acknowledging there was “substantial doubt” about its future.
The move sent the stock on its biggest decline in more than two years.
Eddie Lampert, a hedge fund manager who serves both as Sears’s CEO and its largest investor, has used his own money to help keep the business afloat. Earlier this week, his investment firm agreed to lend Sears an additional $200 million.
Sears had said last year it was seeking a buyer for its Kenmore name, along with the DieHard battery and Craftsman tool brands. It sold Craftsman to Stanley Black & Decker Inc. this year for about $900 million, but the other two brands remain part of Sears.
The Kenmore name first appeared on a sewing machine in 1913, then expanded to washing machines in 1927. The lineup later grew to encompass everything from microwaves to the Lady Kenmore electric shaver.