Sears, once a lauded household name whose blue signs made you feel a sense of hope, wonder, and happiness, is now being stripped apart, selling for bits and pieces, nickels and pennies on the black market. Hyperbole aside, the announcement on Thursday indicating plans to sell Kenmore-branded appliances on Amazon.com is surely not a good sign for the washed-up mogul.
$SHLD also said that its Kenmore Smart appliances will be integrated with $AMZN’s Alexa platform, a deal that comes more than a year after $SHLD’s announcement in May 2016 that it would explore alternatives for its Kenmore, Craftsman, DieHard, and $SHLD Home Services businesses. Stanley Black & Decker Inc. paid an initial consideration of $525 million for Craftsman in January, with the deal valued at up to $900 million.
According to Eddie Lampert, chairman and CEO, this will expand distribution of Kenmore products as customers will be able to tap into quality customer services that $AMZN has to offer, something that $SHLD has been waning on for at least a decade. This lengthy struggle has resulted in the shutdown of stores at a rate of 265 during the fiscal year 2017 and 43 in the past quarter, with comparable sales down 12.4 percent at $SHLD stores and 11.2 percent for Kmart stores in the first quarter.
Unfortunately, these disappointing sales numbers are no shock as $SHLD has lost approximately $10 billion over the last six years. Store traffic has also struggled. $SHLD has also been trimming its real-estate portfolio – which includes both $SHLD and Kmart stores – in an effort to shutdown many of its big-box locations, which are no longer profitable. Further, it is unlikely that they will be able to compete in a marketplace where the price is incredibly competitive and fulfillment costs are high, creating challenging margins. For $SHLD, the future looks bleak, as the bottom line remains that the company is internally broken and there is no foreseeable model to change.