|
Sears Holdings - Definition and Overview |
| Related Words: Anthology, Aquarium, Assets, Balance, Block, Body, Capital, Capitalization, Chattels, Collection, Compilation, Corpus, Data, Effects |
|
|
|
Sears Holdings is a proposed new retail holding company, created from the merger of Sears, Roebuck and Company of Hoffman Estates, Illinois and Kmart Holdings Corporation of Troy, Michigan.
The new company will be the third largest retailer in revenue in the United States (behind Wal-Mart and Home Depot), and the second-largest in terms of full-line and off-mall locations.
The combined company expects to complete the merger in March 2005 and will have its headquarters in Hoffman Estates.
Rationale for merger
The proposed merger was approved by the board of directors of the two companies on November 16, 2004 and announced the next morning. During a conference call to investors and other stakeholders, the company, particularly Alan J. Lacy, cited several reasons for combining forces:
- Sears has begun investing in new, larger off-mall stores, called Sears Grand stores. Earlier in the year Sears had purchased dozens of current Kmart locations; the merger permits the combined company to accelerate that process.
- Management believes that the combined company can be of greater value to its stockholders as an operating company than as sources of liquidating real estate assets.
- Proprietary brands held by both companies (Craftsman, Kenmore, Lands' End, Diehard, Martha Stewart Everyday, Joe Boxer, Jaclyn Smith, Sesame Street) can be made more accessible to their target demographics by leveraging their combined real estate holdings. This contributes to an expected $200 million/year in revenue synergies.
- At least $300 million/year in cost savings is expected annually, particularly in the supply chain and in administrative overhead.
- The establishment of a shared customer-focused corporate culture between the two companies should yield improvements in revenue per unit area.
Preservation of two brands after the merger allows Sears to focus on customers who own their own homes and earn a higher income than those targeted by Kmart.
External links
|
|
|
