Sears continues to struggle. Yesterday, it reported a net loss for the last quarter of $2.4 billion. Same store sales declined during the quarter as well. The firm announced that it will be bolstering its balance sheet by selling off its Sears Hardware stores (along with several other moves designed to increase cash). I understand the move, given the liquidity concerns about the company. However, I found one item in Chairman Lampert's letter to shareholders rather puzzling. He described the third pillar of the company's strategy:
With regard to our third pillar, we still have a long way to go
but Kenmore and Craftsman have held up relatively well, despite our
overall company performance and housing builds and turnover continuing
at relatively low levels. In the fourth quarter of 2011, Kenmore
maintained its market leadership in appliances, while Craftsman, too,
gained market share. But, market share alone is not enough. When we
think about brands, we think about brands like Nike and Apple, and we
aspire to have Kenmore and Craftsman be the Nike and Apple of the
appliances, tools, and lawn and garden industries.
If a key pillar of the strategy is to build the Kenmore and Craftsman brands, then why sell off the hardware stores? Is Sears more known for and appealing to customers with regard to apparel or hardware? Sears already had announced the intent to sell Kenmore and Craftsman products at other retailers. Will the brands thrive if the hardware stores are spun off entirely? Are there synergies that will be lost as a result of the sale of the hardware stores? I don't know the answers to these questions, but I think management must address these issues and explain their thinking to investors.