Sears and Kmart Agree to Merge
Hoffman Estates, Ill., Kmart is buying Sears in an $11 billion deal.
The deal calls for Kmart Holding Corp. and Sears, Roebuck and Co. to merge into a single retail company named Sears Holdings Corp. The new Sears will be the nation’s third-largest retailer, with approximately $55 billion in annual revenues, 2,350 full-line and off-mall stores, and 1,100 specialty retail stores.
Sears Holdings will be headquartered in Hoffman Estates, Ill., and Kmart will continue to have a significant presence in Troy, Mich., the company said. The new company pointed to the benefits from improved operational efficiency in areas such as procurement, marketing, information technology and supply chain management.
Edward S. Lampert, chairman of Kmart, will be the chairman of Sears Holdings. He will be joined in an “office of the chairman” by Alan J. Lacy, current chairman and CEO of Sears, and Aylwin B. Lewis, current president and CEO of Kmart. Lacy will be vice chairman and CEO of Sears Holdings; Lewis will be president of Sears Holdings and CEO of Kmart and Sears Retail.
Glenn R. Richter, currently executive VP and CFO of Sears, Roebuck, will be executive VP and CFO of Sears Holdings. William C. Crowley, currently senior VP, finance of Kmart and a Kmart board member will be executive VP, finance and integration of Sears Holdings.
Wal-Mart Breaks Q3 Records
Bentonville, Ark., Wal-Mart Stores posted record third quarter sales and earnings for the quarter ended Oct. 31. Net income rose to $2.29 billion, up from $2.03 billion in the same quarter last year. Net sales were $68.5 billion, an increase of 9.7% over the third quarter of fiscal 2004. Income from continuing operations for the quarter was $2.3 billion, an increase of 12.7% from $2.0 billion in the third quarter of fiscal 2004. Total U.S. comparable sales for the quarter increased 1.7 percent, which is represented by a 1.3 percent comp increase for Wal-Mart Stores and a 4.0 percent comp increase for Sam’s Club.
Lee Scott, President and CEO said, “I am pleased to report another record quarter of sales and earnings. The economy continues to improve and we are well positioned for the holidays.”
Luxury Shopping Index Declines
Stevens, Pa., Luxury consumers’ confidence in the economy took a hit in the third quarter. After rising to 102.7 in the second quarter, the Luxury Consumption Index declined to 96.0, down 6.7 points, according to Unity Marketing’s latest tracking study of the luxury market.
The Luxury Consumption Index measures the luxury consumers’ feelings and attitudes about their financial well-being. The majority of luxury consumers (53%) felt their financial position was the same and no better than during the previous three months. Further, nearly 40% said the country as a whole was less well off in the third quarter.
“The market for luxury goods and services is driven by consumers’ feelings, certainly not needs,” says Pam Danziger, president of Unity Marketing and author of the new book Let Them Eat Cake: Marketing Luxury to the Masses — as well as the Classes. “Luxury consumers (average income $136.5k) with their surfeit of material wealth have no pressing need to go shopping when things don’t look promising. Luxury consumers are in a unique position to wait it out when times are tough and that is just what they did in the third quarter.”