Sears hopes to clean up with Kenmore, seeks DieHard jolt as profit woes persist
CHICAGO — Sears Holdings is looking to generate more cash from its trusty Kenmore, Craftsman and DieHard brands than the sale of washers and dryers, tools and car batteries in its own stores.
The embattled retailer announced Thursday that it was exploring unspecified alternatives for those brands, along with its Sears Home Services business, by expanding their availability beyond the doors of Sears and Kmart.
The disclosure came as the retailer, based in suburban Chicago, reported another bad quarter for both its Sears and Kmart units.
“Our iconic KCD brands are beloved by the American consumer and we believe that we can realize significant growth by further expanding the presence of these brands outside of Sears and Kmart,” the company said in its earnings release.
“By evaluating potential partnerships or other transactions that could expand distribution of our brands and service offerings, we can position both businesses to achieve greater success.”
While not specifying what options were under consideration, they potentially could involve selling the products in other stores, licensing them to other companies or an outright sale. Sears said it has retained Citigroup Global Markets and LionTree Advisors to help explore options.
Although the Kenmore, Craftsman and DieHard names have faded a bit as the overall Sears brand has diminished, they are still well-established brands with strong reputations, said Neil Stern, senior partner at Chicago-based McMillanDoolittle.
Expanding distribution would likely bring in extra revenue, Stern said. But if you can buy Kenmore and Craftsman elsewhere, that’s one less reason for shoppers to come to Sears, he said.
Sears was once a primary destination for appliance sales in the U.S., largely on the strength of its Kenmore brand, once one of the top two major appliance brands in the U.S., according to market research firm Euromonitor International.
Now sales are shifting to home and garden specialty retailers like the Home Depot and Lowe’s, which accounted for 34 percent of major appliance sales in 2015, according to Euromonitor.
Kenmore’s share of the major appliance market dropped to 12.7 percent for the 12 months ending in March, down from 17.4 percent five years ago, when it had the largest slice of the market, according to Louisville, Ky.-based Stevenson TraQline’s quarterly market survey.
But it’s still the thirdbiggest player, behind General Electric and Whirlpool.
Craftsman still accounts for the largest share of the hand tools and accessories market by dollar share, with about 28.5 percent, and accounts for about 9 percent of portable power tool sales, with both categories down between 4 and 5 percent over the last five years, said Stevenson TraQline.
Sears lost $471 million, or $4.41 per share in the period ending April 30, up from a loss of $303 million, or $2.85 per share, last year.