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Sales have slid steadily since Edward Lampert combined Kmart and Sears in 2005 to form Sears Holdings Corp. (Toby Talbot/Associated Press/File 2007) |
WASHINGTON - Sears Holdings Corp., which owns the Sears and Kmart retail chains and Kenmore appliances, will reorganize into separate business units after a year of declining sales and dwindling profit.
Sears will designate a leader for each business and executive advisers to oversee performance, spokesman Chris Brathwaite said in an e-mail. He did not detail what each division would do.
Chairman Edward Lampert has focused on bolstering profit at Sears Holdings, the biggest US department store company. But sales at established stores have declined in every quarter since he combined Kmart and Sears, Roebuck & Co. in 2005. Profit margins through Feb. 2 probably will drop for a third straight quarter, following two years of steady growth, Sears said last week.
"This is a desperately troubled situation," said Howard Davidowitz, chairman of the New York-based retail consulting firm Davidowitz & Associates.
Sears, which declined 39 percent last year in Nasdaq Stock Market trading, will give "greater control, authority, and autonomy" to the individual businesses, Brathwaite said.
The retailer, which blamed increased competition and unfavorable economic conditions for the drop in fourth-quarter profit, posted declines in the second and third quarters, with third-quarter net income falling 99 percent.
Lampert has tried to lure customers by extending products over the whole organization, adding Lands' End clothing to Sears stores and Craftsman tools at Kmart. He boosted technology investments and introduced advertising campaigns this year for both chains while telling shareholders at the company's annual meeting in May that fixing retail was "a priority." Some analysts say he's underinvested in the stores for too long.
"Once people decide they're not going to shop there anymore, it's hard to get them to come back," Jon Fisher, a portfolio manager with Fifth Third Asset Management, said this month.
Sears shares have fallen 12 percent this year.
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