Sears Warns of 2Q Drop; Home Depot Dittos
Hoffman Estates, Ill., Sears Holdings Corp. on Tuesday warned that languishing summer sales at both its Sears and Kmart stores will negatively impact 2Q earnings.
During a nine-week period that ended July 7, same-store sales at Kmart’s U.S. locations fell 3.9%, while same-store sales fell 4% at Sears. There were slight increases in women’s apparel and footwear sales at Sears stores, but they are not enough to offset declines across most other categories.
Atlanta-based The Home Depot issued much the same warning on Tuesday, citing weak conditions in the housing market and the sale of its wholesale distribution business as reasons for declining earnings. The retailer said it expects total retail sales to be down 1% to 2% for the year and sales at stores open at least a year to be down in the mid-single-digit range.
Home Depot also announced Tuesday that it would open approximately 108 new stores in fiscal 2007.
Limited Brands sells stake in Limited Stores
COLUMBUS, Ohio Limited Brands announced that it has finalized the sale of a 75% ownership interest in its Express brand to affiliates of Golden Gate Capital for pre-tax cash proceeds of $602 million, subject to closing adjustments. Limited Brands and Golden Gate Capital agreed to increase Golden Gate Capital’s stake to 75% from the previously announced 67%. The change will result in an additional $54 million in pre-tax cash proceeds to Limited Brands which is included in the above-stated $602 million. After pre- closing adjustments, Limited Brands expects to receive after-tax cash proceeds of approximately $425 million and to record an after-tax gain of approximately $188 million, both subject to post-closing adjustments.
Express will continue to operate under the same brand name and is expected to remain headquartered in its current location in Columbus, Ohio. Express’ 2006 net sales were $1.7 billion, and it currently operates 624 store locations.
The company also announced that it has signed a definitive agreement to transfer a 75% ownership interest in its Limited Stores business to affiliates of Sun Capital Partners. In exchange, Sun Capital Partners will contribute $50 million of equity capital into the business and will arrange for a $75 million credit facility. The transaction is expected to close within the next 30 days and is subject to customary conditions. Limited Brands will receive no cash proceeds and expects to record an after-tax loss of approximately $42 million on the transaction, subject to post-closing adjustments.
Limited Stores will continue to operate under the same brand name, and it will remain headquartered in its current location in Columbus, Ohio. Limited Brands will provide transitional services, including sourcing and production through its Mast business. Limited Stores’ business includes 251 stores and 2006 net sales were $493 million.
“We have moved from a portfolio of brands and businesses to an enterprise powered by two world-leading brands: Victoria’s Secret and Bath and Body Works…the best brands in intimate apparel and personal care. These strategic actions will better position Express and Limited Stores for future growth and profitability and enable the ‘new’ Limited Brands to derive the benefit of our increased focus,” said Leslie Wexner, chairman and ceo of Limited Brands.
Pep Boys fills three exec roles
PHILADELPHIA The Pep Boys – Manny, Moe & Jack today announced the appointment of Troy Fee as senior vp of human resources. Fee, who will join Pep Boys’ executive committee of senior leaders, will be responsible for all aspects of human resources for the company’s almost 19,000 associates. He will report to president and ceo Jeff Rachor.
Fee comes to Pep Boys from TBC Corp., the parent company of organizations such as Big O Tires, Tire Kingdom and National Tire & Battery, where he served as vp of human resources and, most recently, senior vp of human resources and shared services.
Pep Boys also announced that Scott Ross has joined the company as divisional vp of service for the West division. Ross’ career in the automotive industry spans more than 20 years. Most recently, he held the position of director of operations for Driversselect in Dallas, Texas and previously served as vp of fixed operations for Group 1 Automotive in Houston, Texas, a top-five automotive retailer.
In addition, the company recently welcomed 20-year automotive industry veteran David Padgett as divisional vp of service for the Southwest and Puerto Rico divisions. Padgett comes to Pep Boys from AutoNation, where he served as regional fixed operations director. Both Ross and Padgett will report to senior vp of service, Joe Cirelli.