Kmart to acquire Sears - Sitcoms Online Message Boards

Brian · 11-17-2004, 11:08 PM

http://story.news.yahoo.com/news?tmp...t_sears_merger

By ANNE D'INNOCENZIO, AP Business Writer

NEW YORK - A resurgent Kmart, home of the blue light special, is buying the once-dominant Sears department store chain in a surprising $11 billion gamble it is counting on to help both better compete with Wal-Mart and other big-box retailers.

Led by Kmart Holding Corp. chairman Edward Lampert, the new Sears Holdings Corp. would be the nation's third largest retailer. Both chains would survive, but several hundred stand-alone Kmarts throughout the country are expected to be transformed into Sears stores. The goal: A quick kick-start to sales away from Sears traditional base of shopping malls.

Lampert and Sears chairman and CEO Alan Lacy, in announcing the deal on Wednesday, promised up to $500 million a year in savings within three years from store conversions, back-office job cuts, more efficient buying of goods and possible store closings.

Shares of both Kmart and Sears, Roebuck and Co. surged on the news, but some analysts are skeptical that it amounts to a home run.

"Both have been broken in some sense," said Dan Hess, president and chief executive of Merchant Forecast, a New York-based independent research company. "Kmart has to learn to survive in a Wal-Mart world and Sears needs to learn to survive in a world of Home Depot and Lowe's."

Lampert, 42, was as an assistant to Robert Rubin at Goldman Sachs & Co. before leaving to form a hedge fund at the age of 25. He orchestrated the deal and will lead a new board that will be dominated by Kmart directors.

""We need to have a very low cost structure in order to compete with our biggest competitors," said Lampert, whose Greenwich, Conn.-based investment firm controls Kmart and is Sears largest individual shareholder, with a 15.8 percent stake.

For Sears, the merger allows the company to move more quickly to where it believes its strongest base of customers are. "Off mall is where we need to move very aggressively," said Lacy, who will become vice chairman and chief executive of Sears Holding.

Lacy said he and Lampert have known each other for four years. The idea for a combined company first arose when they were in talks about Sears' purchase of 50 Kmart stores earlier this year, he said.

The new company is expected to have $55 billion in annual revenues and 3,500 outlets. That will mean it will trail only Wal-Mart Stores Inc. and Home Depot Inc. among the biggest U.S. retailers.

It will be headquartered in the northwestern Chicago suburb of Hoffman Estates, where Sears has its headquarters, but will maintain a "significant presence" in Troy, Mich., where Kmart is based.

The deal marks a remarkable comeback for Kmart, which filed for Chapter 11 bankruptcy protection in early 2002, leading to the closing of about 600 stores, termination of 57,000 Kmart employees and cancellation of company stock.

Lampert gained control of Kmart when the retailer emerged from bankruptcy in May 2003 through the conversion of his debt holdings into equity. In March, Kmart posted its first profitable quarter in three years.

While same-store sales have continued to decline, Lampert has maximized cash flow in part by selling off some of the stores to Sears and Home Depot.

On Wednesday, Kmart said it earned $553 million, or $5.45 per share, in the third quarter ended Oct. 27, compared with a loss of $23 million, or 26 cents per share, for the same period a year ago. Its stock price has risen more than sevenfold from $15 a share when it emerged from bankruptcy.

Sears' roots date to the late 1800s when it offered merchandise by mail order to farmers, opened its first retail store in 1925 and eventually became the nation's biggest department store operator.

Mired in a retail slump, Sears had long fallen out of favor on Wall Street after losing ground to competitors and enduring sluggish sales for years. The company last fall introduced its Sears Grand stores, which offer grocery and convenience items besides traditional Sears fare such as clothing, home appliances and tools. The concept had delivered promising results for the retailer at its first three stores in metropolitan Salt Lake City, Las Vegas and in the Chicago suburb of Gurnee.

Lampert said the goal for the combined company is to achieve a 10 percent operating profit margin, a level that's generated by such retailers as Gap Inc. and Target Inc. But he noted that in the meantime, the financial operations will be "lumpy" as it digests the two companies.

A key part of increasing productivity at the stores will be in the cross selling of the brands, though company officials declined to be specific on which they would overlap. Besides Craftsman tools and Kenmore appliances, Sears' exclusive brands include Lands' End clothing. Kmart's brands include Martha Stewart (news - web sites), Jaclyn Smith and Joe Boxer. Lampert said that Sears could also benefit from Kmart's expertise in its pharmaceutical department and health and beauty products.

Lampert said that it is unlikely any Sears stores would be converted to Kmarts and that store closings are a possibility. "I think we'll probably end up over time opening more stores than we close, but obviously if we don't operate the stores well, it might be the other way around," he said.

He also would not provide any details on possible layoffs, except to say, "There will be some head count changes that come out of this."

Sears shares soared $7.79, or 17 percent, to close at $52.99 Wednesday on the New York Stock Exchange (news - web sites) and Kmart shares climbed $7.78, or 7.7 percent, to close at $109 on the Nasdaq Stock Market.

Shares of Martha Stewart Living Omnimedia Inc. also rose more than 6 percent on the belief among investors that the deal could bring a larger-scale merchandising agreement with Sears. Currently, Martha Stewart Everyday brand is sold exclusively at Kmart in the United States, and at Sears Canada.

Under Wednesday's agreement, which was unanimously approved by both companies' boards of directors, Kmart shareholders would receive one share of new Sears Holdings stock for each Kmart share. Sears shareholders can choose $50 in cash or half a share of Sears Holdings stock. That portion of the deal values Sears shares at $11 billion, a 10.6 percent premium over its value at Tuesday's close.

The merger, expected to close by the end of March 2005, is subject to approval by Kmart and Sears shareholders, regulatory approvals and customary closing conditions.

Sears Holding also created the office of the chairmanship, which consists of Lampert, Lacy and Aylwin B. Lewis, who was named president of Sears Holding Corp., CEO of Sears Retail. Last month, Lewis, formerly an executive at restaurant operator Yum Brands Inc., was named chief executive and president of Kmart.

Brent88 · 11-17-2004, 11:31 PM

I've never been impressed with K-Mart. I can get anything at Wal-Mart that I can get there and it's an easier chore. Everytime I go to K-Mart I feel all dirty afterwards, not to mention they seem to be low on everything(not enough on the shelves) and it's pretty disorganized.

*MIBabe03* · 11-18-2004, 12:10 AM

Well Nate will probably be happy about that.

-*Forever*- · 11-18-2004, 12:53 AM

Quote:

Originally posted by Princess2003
Well Nate will probably be happy about that.

Damn! Someone said it before me!

And great. Sears used to be a pretty nice store.

Brent88 · 11-18-2004, 12:58 AM

Quote:

Originally posted by Princess2003
Well Nate will probably be happy about that.

I forgot about good ole Nate.

Hollow · 11-18-2004, 01:13 AM

http://www.sitcomsonline.com/boards/...threadid=56792

Brian Damage · 11-18-2004, 01:20 AM

Why was Nate banned?

Liza · 11-18-2004, 01:21 AM

I think it's overall a good thing. K-Mart was never going to recover from bankruptcy. My father used to work for the corporation, and it's just so sad to see what poor management has done to so many people. Luckily we got out in time, but so many people didn't. I hope the Sears people will look after all the K-mart employees who have lost so much.

dawsongirl · 11-18-2004, 03:16 AM

Quote:

Originally posted by Brian Damage
Why was Nate banned?

Lewd posts I think was his final straw.

I'm not sure what to think. Not a huge Sears fan, though a good chink of the appliances we own came from there. And I don't really shop at K-Mart too much. I always put them between Wal-Mart and Target in terms of merchandise quality and ambiance. I despise Wal-Mart. White trash people don't even want to shop at mine...it's that bad.

11-17-2004, 11:08 PM	#1
Brian Member Forum Celebrity Join Date: Jun 23, 2001 Posts: 20,451	Kmart to acquire Sears http://story.news.yahoo.com/news?tmp...t_sears_merger By ANNE D'INNOCENZIO, AP Business Writer NEW YORK - A resurgent Kmart, home of the blue light special, is buying the once-dominant Sears department store chain in a surprising $11 billion gamble it is counting on to help both better compete with Wal-Mart and other big-box retailers. Led by Kmart Holding Corp. chairman Edward Lampert, the new Sears Holdings Corp. would be the nation's third largest retailer. Both chains would survive, but several hundred stand-alone Kmarts throughout the country are expected to be transformed into Sears stores. The goal: A quick kick-start to sales away from Sears traditional base of shopping malls. Lampert and Sears chairman and CEO Alan Lacy, in announcing the deal on Wednesday, promised up to $500 million a year in savings within three years from store conversions, back-office job cuts, more efficient buying of goods and possible store closings. Shares of both Kmart and Sears, Roebuck and Co. surged on the news, but some analysts are skeptical that it amounts to a home run. "Both have been broken in some sense," said Dan Hess, president and chief executive of Merchant Forecast, a New York-based independent research company. "Kmart has to learn to survive in a Wal-Mart world and Sears needs to learn to survive in a world of Home Depot and Lowe's." Lampert, 42, was as an assistant to Robert Rubin at Goldman Sachs & Co. before leaving to form a hedge fund at the age of 25. He orchestrated the deal and will lead a new board that will be dominated by Kmart directors. ""We need to have a very low cost structure in order to compete with our biggest competitors," said Lampert, whose Greenwich, Conn.-based investment firm controls Kmart and is Sears largest individual shareholder, with a 15.8 percent stake. For Sears, the merger allows the company to move more quickly to where it believes its strongest base of customers are. "Off mall is where we need to move very aggressively," said Lacy, who will become vice chairman and chief executive of Sears Holding. Lacy said he and Lampert have known each other for four years. The idea for a combined company first arose when they were in talks about Sears' purchase of 50 Kmart stores earlier this year, he said. The new company is expected to have $55 billion in annual revenues and 3,500 outlets. That will mean it will trail only Wal-Mart Stores Inc. and Home Depot Inc. among the biggest U.S. retailers. It will be headquartered in the northwestern Chicago suburb of Hoffman Estates, where Sears has its headquarters, but will maintain a "significant presence" in Troy, Mich., where Kmart is based. The deal marks a remarkable comeback for Kmart, which filed for Chapter 11 bankruptcy protection in early 2002, leading to the closing of about 600 stores, termination of 57,000 Kmart employees and cancellation of company stock. Lampert gained control of Kmart when the retailer emerged from bankruptcy in May 2003 through the conversion of his debt holdings into equity. In March, Kmart posted its first profitable quarter in three years. While same-store sales have continued to decline, Lampert has maximized cash flow in part by selling off some of the stores to Sears and Home Depot. On Wednesday, Kmart said it earned $553 million, or $5.45 per share, in the third quarter ended Oct. 27, compared with a loss of $23 million, or 26 cents per share, for the same period a year ago. Its stock price has risen more than sevenfold from $15 a share when it emerged from bankruptcy. Sears' roots date to the late 1800s when it offered merchandise by mail order to farmers, opened its first retail store in 1925 and eventually became the nation's biggest department store operator. Mired in a retail slump, Sears had long fallen out of favor on Wall Street after losing ground to competitors and enduring sluggish sales for years. The company last fall introduced its Sears Grand stores, which offer grocery and convenience items besides traditional Sears fare such as clothing, home appliances and tools. The concept had delivered promising results for the retailer at its first three stores in metropolitan Salt Lake City, Las Vegas and in the Chicago suburb of Gurnee. Lampert said the goal for the combined company is to achieve a 10 percent operating profit margin, a level that's generated by such retailers as Gap Inc. and Target Inc. But he noted that in the meantime, the financial operations will be "lumpy" as it digests the two companies. A key part of increasing productivity at the stores will be in the cross selling of the brands, though company officials declined to be specific on which they would overlap. Besides Craftsman tools and Kenmore appliances, Sears' exclusive brands include Lands' End clothing. Kmart's brands include Martha Stewart (news - web sites), Jaclyn Smith and Joe Boxer. Lampert said that Sears could also benefit from Kmart's expertise in its pharmaceutical department and health and beauty products. Lampert said that it is unlikely any Sears stores would be converted to Kmarts and that store closings are a possibility. "I think we'll probably end up over time opening more stores than we close, but obviously if we don't operate the stores well, it might be the other way around," he said. He also would not provide any details on possible layoffs, except to say, "There will be some head count changes that come out of this." Sears shares soared $7.79, or 17 percent, to close at $52.99 Wednesday on the New York Stock Exchange (news - web sites) and Kmart shares climbed $7.78, or 7.7 percent, to close at $109 on the Nasdaq Stock Market. Shares of Martha Stewart Living Omnimedia Inc. also rose more than 6 percent on the belief among investors that the deal could bring a larger-scale merchandising agreement with Sears. Currently, Martha Stewart Everyday brand is sold exclusively at Kmart in the United States, and at Sears Canada. Under Wednesday's agreement, which was unanimously approved by both companies' boards of directors, Kmart shareholders would receive one share of new Sears Holdings stock for each Kmart share. Sears shareholders can choose $50 in cash or half a share of Sears Holdings stock. That portion of the deal values Sears shares at $11 billion, a 10.6 percent premium over its value at Tuesday's close. The merger, expected to close by the end of March 2005, is subject to approval by Kmart and Sears shareholders, regulatory approvals and customary closing conditions. Sears Holding also created the office of the chairmanship, which consists of Lampert, Lacy and Aylwin B. Lewis, who was named president of Sears Holding Corp., CEO of Sears Retail. Last month, Lewis, formerly an executive at restaurant operator Yum Brands Inc., was named chief executive and president of Kmart.

11-17-2004, 11:31 PM	#2
Brent88 Member Forum Star Join Date: Aug 01, 2003 Location: Alabama Posts: 16,174	I've never been impressed with K-Mart. I can get anything at Wal-Mart that I can get there and it's an easier chore. Everytime I go to K-Mart I feel all dirty afterwards, not to mention they seem to be low on everything(not enough on the shelves) and it's pretty disorganized.
	__________________ Brent

11-18-2004, 12:10 AM	#3
MIBabe03 Loving Swingtown! Forum 4000 Club Member Join Date: Jul 28, 2002 Location: TX Posts: 4,646	Well Nate will probably be happy about that.
	__________________ Laura and Mario November 10, 2006

11-18-2004, 01:13 AM	#6
Hollow Member Forum Superstar Join Date: Dec 16, 2001 Posts: 30,406	http://www.sitcomsonline.com/boards/...threadid=56792

11-18-2004, 01:20 AM	#7
Brian Damage I'm Rich Bitch Forum Icon Join Date: Feb 03, 2002 Location: What Ain't No Country I Ever Heard Of...They Speak English in What? Posts: 63,107	Why was Nate banned?

11-18-2004, 01:21 AM	#8
Liza BestYearsofOurLives Forum Veteran Join Date: Apr 24, 2001 Location: Rochester, NY Posts: 6,537	I think it's overall a good thing. K-Mart was never going to recover from bankruptcy. My father used to work for the corporation, and it's just so sad to see what poor management has done to so many people. Luckily we got out in time, but so many people didn't. I hope the Sears people will look after all the K-mart employees who have lost so much.