FINANCE

Sears to explore sale of assets

BY Marianne Wilson

Sears Holdings Corp. is considering the sale of one of its signature brands along with some other assets.

The struggling retailer announced that a special committee of its board is initiating a “formal process” to explore the sale of its Kenmore brand, along with the home improvement products business and the Parts Direct business of the Sears Home Services division. In April, ESL Investments, the hedge fund run by Sears CEO Eddie Lampert, sent a letter in which it which it said it is willing to make a proposal to buy those assets.

The letter, signed by Lampert, noted that Kenmore and the other assets in question have “substantial value” and that divesting one or more of them would enable Sears to improve its debt profile and liquidity position. ESL described Kenmore as an “iconic brand” and said it would be prepared to close a deal for the brand within 90 days.

In its announcement, Sears noted it is also considering “other alternatives…that may maximize value” for Sears.

Sear said it does not plan to comment further about any asset sales “until it determines that additional disclosure is appropriate.”

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Forrester Analysis: What’s behind the Walmart-Flipkart deal

Walmart has been looking to get into the Indian retail market for more than 15 years but the regulation of not allowing foreign direct investment (FDI) into multi-brand retail has made it impossible for Walmart to access the Indian market. Walmart tried to enter via a wholesale model with Bharti in India but failed. Now they see online as the only method to enter the Indian market, which leaves Flipkart as the best investment option for Walmart.

What the deal means for Flipkart:
For Flipkart, this deal is more than just money. If they are looking to raise more funds they already have Softbank as a backer. However, to remain the number one player in India (Amazon coming a close second in just four years in India), they are looking to expand beyond smartphones and fashion. This deal with Walmart can provide Flipkart the expertise of running offline stores, access to sellers and manufacturers, supply chain and the know-how to get into the grocery segment.

Amazon has been selling grocery in India for the past one year while Flipkart has not rolled out this category. With Amazon closing the gap in categories other than fashion, Flipkart needs Walmart to remain competitive in the long term.

What the deal means for the Indian e-commerce market:
“According to Forrester Data, the Indian online retail market is around ~$20 billion in 2017 (2.4% of total retail market in India), which is still relatively small when you compare it to the penetration in other mature markets. The upside is big for both Amazon and Flipkart in the next two decades. No other market except China and U.S. can compete in terms of total retail opportunity. We expect the online retail market in India to reach $73 billion by 2022 from $20 billion in 2017.

To reach the next 100 million buyers, both Amazon and Flipkart will have to invest billions of dollars in warehousing, last mile delivery, and ensure that they provide quality products at low prices. This is a time-consuming process and both these companies need patient capital to capture the online retail opportunity.

For customers, the entry of Walmart is good news as they will get the best deal through competition between these companies. Also, an Amazon-Flipkart deal will certainly face regulatory hurdles from the Competition Commission of India. We should also expect investment from Amazon in an offline grocery player in India once this deal between Flipkart and Walmart is finalized.

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Sears CEO: The company is still ‘fighting like hell’

BY CSA Staff

Sears Holding Corp.’s turnaround may be taking longer than expected, but chairman and CEO Eddie Lampert is committed to moving forward.

At the company’s annual shareholders’ meeting on Wednesday, Lampert said that Sears has “tried to incubate our own capabilities” instead of making major acquisitions — a strategy used by competitors, such as Target and Walmart, according to CNBC.

In the report, he added said that Sears “is on the right path, but we haven’t gotten over the hump. We need to convert our vision into reality, [which has been] made much more difficult because the operating performance isn’t where it needs to be.”

During the meeting, Lampert reiterated that Sears is still “fighting like hell” to turn its business around through numerous steps it has taken throughout the past year, from adding partners, like Uber and GasBuddy, to improving service available on its Shop Your Way membership platform, CNBC said.

Sears’ executive team echoed Lampert’s commitment, adding that Sears “will continue to take actions to right-size the company, increase liquidity and capitalize on the value of its brands,” according to the report.

To read more, click here.

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