Sears Holdings Company SHLD SHLD Good Life, Great Price. Game Room Consultants David Gretz Josh Goldsmith Ben Heily Pat Hand

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Sears History Richard Sears 1886 Watch Reseller 1893 Founded 1931 Allstate Insurance Billion in Sales 1953 First International Presence 1973 Sears Tower 1981 Dean Whitter & Coldwell Banker Bought 1985 Discover Card 1993 Coldwell Banker Sold 2005 Sears Kmart Merger

Sears Holdings Culture Our Vision: Sears Holdings is committed to improving the lives of our customers by providing quality services, products and solutions that earn their trust and build lifetime relationships. Our Mission: Build customer relationships Make more money Improve every day How We Lead: Focus on the customer Build and align teams Know how to make money How We Work Together: Teamwork Integrity Accountability Coaching for execution Positive energy Recognition through results

Sears Offerings Brands Craftsman Kenmore Diehard Lands End Product Categories Apparel Appliances Auto/motorcycle supplies camping & rec equipment lawn and garden furniture/ home accessories tools and hardware baby electronics and computers health and wellness jewelry miscellaneous 3 rd largest general retailer

Competition

Sears outside the U.S. Sears in Canada Simpson - Sears Thursday, September 17 th, 1953 at 9:15 a.m. 25 years New name Largest retailer in Canada Sears in Mexico First opened in 1947 Merger with Grupo Carso

Sears in the 80’s Sear’s aggressively pursues financial services Emerging competition Discount Stores Specialty Stores

Challenges Merchandising operation in serious trouble Massive corporate restructuring Customers knew sears, better than sears knew its customers Couldn’t compete with EDLP strategy Lack of information technology

Changes in Stores Remodeled departments (Power 7) Women’s Apparel, appliances/electronics, home improvements, children’s clothes, automotive, men’s fashion, and furniture Sold not only Sears’ brands, but also national From 50% selling space, to 70% selling space Cut inventory held with out increasing stock outs  Warehouse and distribution changes

Changes in Stores National business manager appointed Buyers were responsible for pricing and product mix for one national format Now, oversees each of the Power 7 departments to more successfully compete against each departments niche market. Slow to remodel though…! By 1992, only the automotive and appliance formats were in place nation wide.

Store Changes 1993, close 113 unprofitable stores… Invested in more floor space for promoting fashion merchandise Point of sale registers, IT Merchandise Assortment Planning System MAPS

The Catalog Major money lost 145 million in 1991, 165 million in 1992 Didn’t utilize customer database Poor service No toll free 800 number 1993 closure of catalog operations Saved money invested in retail restructuring

Transportation/Distribution 1990, created separate company SLS All goods go through replinishment centers Paperless environment from 100 carrier bills to 1 Closed 5 old centers, laid off 5700 employees Built 6 new warehouses

IT and Financial Services Reduced distribution expenses DOS, integrated all stores with distribution sites through point-of-sale systems 1992 sold Dean Witter, included Discover Offered 20% of Allstate insurance in public stock offering

Legal/Ethical Issues 2002 Class Action FLSA Waiting pays Bankruptcy Issues Customer Satisfaction Issues

SWOT Strengths Employees Name Sears Credit Card Strategic partnerships Merger with K-mart Larger customer base 2370 stores in USA Strong corporate history Name/Brand recognition Weaknesses Integration of supply chains Poor online sales Kmart store size Sears is K sq.ft. K-mart is K sq.ft. Fashion merchandise Old Run Down stores

SWOT Opportunities Cost savings through economies of scale Expansion into Hispanic market niche in US HUGE customer database Strategic Alliances Cash in on “Americanism” Enhance global operations Improve free cash levels Threats Internet site Competition JCPenny, Wal-mart  Target Bad Public relations

Buy, Sell, or Hold??? Hold for little or no risk Buy, moderate risk, potential to make $ Current stock comparison Yahoo Finance Current MonthLast MonthTwo Months AgoThree Months Ago Strong Buy0000 Buy3333 Hold3333 Sell1111 Strong Sell0000

Sources Cramer’s Mad Money’ Recap: A Yardstick for Sears. Google Finance, SHLD. Kmart Corp. Sears, Archives. Sears Canada. Sears Canada Inc. Sears Holding Corp. Yahoo Finance, SCC.TO.