Wall Street Jnl 8/23/2013 page B1
Sears Holdings Corp built its Kenmore brand into the dominant force in US major appliances over the better part of a century. It only took a few years of tinkering by hedge fund manager Eddie Lampert to take it apart.
The breakdown was evident on Thursday, when Sears said weakness in home appliance sales caused a key measure of sales at existing US stores to shrink. That contributed to a poor showing for the three months ended Aug. 3, when Sears' net loss deepened to $194 million as overall sales fell 6.3%.
Appliances were a odd area for Sears to not do well. Sears essentially invented the business during WWI. Nearly every other manufacturer and retailer is benefitting as the recovery in the housing market spurs sales of dishwahsers, washing machines and refrigerators. Home Depot Inc. and Lowe's Cos., which have eroded Sears' market leading position, this week reported double-digit gains in appliance sales.
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The damage has a number of causes, former Sears executives and employees said. Sears distrupted a key relationship with Whirlpool Corp. that had underpinned the business for decades. Key management positions turned over frequently. Decaying stores that kept customers away hurt appliance departments as well. Executives focused on technological gimmicks like giving sales associates iPads that proved more frustrating than useful.
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Much of Sears' strength in major appliances derived from a long-standing relationship with Whirlpool.
Whirlpool also made many products for sears' 86-year-old Kenmore brand, which generally offered more features at the same price as other brands. It was able to do that, because Whirlpool agreed to give new features like timed dryers (?) and three cycle washers to Kenmore first before ading them to its own products, people familiar with the arrangement said.
That dynamic changed in 2009 when Sears, in an effort to boost profitability, switched many Kenmore produts from Whirlpool to LG Electronics and Samsung Electronics, those people said. The newly designed Kenmore products lacked many of the bells and whistles for which the brand was known and sales suffered, they added.
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A graph shows Sears appliance sales declining from 40% of the market in 2002 to 28.9 now while Lowes rose from 10% then to 19.1%, Home Depot went from less than 5% in 2002 to 12.1% and Best Buy rse from 5% to 8.3%.
Nowhere are the nightmares with Sears service mentioned, but that has to be a factor.
The article is long, but these are selected highlights. The lines between paragraphs indicate jumps in the text. Eddie Lampert seems so soundly hated one wonders if he is even welcome in his mother's house.[this post was last edited: 8/23/2013-08:33]
Sears Holdings Corp built its Kenmore brand into the dominant force in US major appliances over the better part of a century. It only took a few years of tinkering by hedge fund manager Eddie Lampert to take it apart.
The breakdown was evident on Thursday, when Sears said weakness in home appliance sales caused a key measure of sales at existing US stores to shrink. That contributed to a poor showing for the three months ended Aug. 3, when Sears' net loss deepened to $194 million as overall sales fell 6.3%.
Appliances were a odd area for Sears to not do well. Sears essentially invented the business during WWI. Nearly every other manufacturer and retailer is benefitting as the recovery in the housing market spurs sales of dishwahsers, washing machines and refrigerators. Home Depot Inc. and Lowe's Cos., which have eroded Sears' market leading position, this week reported double-digit gains in appliance sales.
__________
The damage has a number of causes, former Sears executives and employees said. Sears distrupted a key relationship with Whirlpool Corp. that had underpinned the business for decades. Key management positions turned over frequently. Decaying stores that kept customers away hurt appliance departments as well. Executives focused on technological gimmicks like giving sales associates iPads that proved more frustrating than useful.
_________
Much of Sears' strength in major appliances derived from a long-standing relationship with Whirlpool.
Whirlpool also made many products for sears' 86-year-old Kenmore brand, which generally offered more features at the same price as other brands. It was able to do that, because Whirlpool agreed to give new features like timed dryers (?) and three cycle washers to Kenmore first before ading them to its own products, people familiar with the arrangement said.
That dynamic changed in 2009 when Sears, in an effort to boost profitability, switched many Kenmore produts from Whirlpool to LG Electronics and Samsung Electronics, those people said. The newly designed Kenmore products lacked many of the bells and whistles for which the brand was known and sales suffered, they added.
____________
A graph shows Sears appliance sales declining from 40% of the market in 2002 to 28.9 now while Lowes rose from 10% then to 19.1%, Home Depot went from less than 5% in 2002 to 12.1% and Best Buy rse from 5% to 8.3%.
Nowhere are the nightmares with Sears service mentioned, but that has to be a factor.
The article is long, but these are selected highlights. The lines between paragraphs indicate jumps in the text. Eddie Lampert seems so soundly hated one wonders if he is even welcome in his mother's house.[this post was last edited: 8/23/2013-08:33]
