Sears Holding's Lampert Continues Great Brand Lineup

Eddie Lampert continues to stock Sears (SHLD) with well-known quality brands. Beginning this spring, Sears becomes the exclusive national retailer to sell the Snapper brand of lawn equipment.

From the Press Release:

"As the leading retailer of powered lawn and garden equipment, we're very pleased to add another all-star brand to our roster," said Jeff Rothe, vice president and general merchandise manager for Sears Holdings. "Now consumers have both Craftsman, the nation's leading and most trusted brand, and Snapper -- to select from when shopping at Sears for their lawnmower and tractor needs.

"With these two powerhouse brands, plus our existing brands, Sears offers the largest powered lawn and garden assortment to our customers. Additionally, Snapper's spokesperson Brett Favre will introduce the new mowers, tractors and their availability at Sears in a new national ad campaign set to appear in late February," Rothe said.

The Snapper line of products will be available in all Sears Full-line stores, Sears Hardware stores and Sears Dealer stores. In addition, look for a new interactive Snapper site on the lawn and garden page, www.sears.com.

Back in November I posted my thoughts that Lampert was attempting to assemble a "store of brands" that could then be advertised to people. This Snapper move is another important step in that direction. The best part is getting Brett Farve in the deal. His promotional activities for both Snapper and Sears are sure to pay off. Farve is a respected name and to witness his effect, the Wrangler Jeans division of VF Corp (VFC) experienced record profits in 2006 and 2007 as Farve became the spokesperson for them. In short, what he pushes sells.

Lampert is assembling a great brand lineup and it will payoff. In the meantime the cash position of the company remains strong, the share count is evaporating and the balance sheet is the strongest in the industry.

Disclosure: Long Sears.

Comments

[User 138125:]

Long SHLD and a Packers fan so I should probably point out that it's spelled Favre not Farve.

2008 Jan 10 07:17 AM

[Will Morris...:]

It's interesting to note that Snapper left WalMart last year because they didn't believe in lowering the price and subsequent quality of the product. I'm sure they were desperate for a national retailer and posed a great value to Sears.

2008 Jan 10 11:04 AM

[jim s.:]

I am short SHLD. They keep losing business to WMT, TGT and Kohls and have the Kmart albatross around their neck. Though their P/E is a tad lower (now) than either of those uber-efficient big boxers, I'm guessing it will suffer in the coming year.

I stop in regularly to area Kmarts and the one Sears and am rarely impressed. The former have the stench of death about them and the latter is almost as depressing. This stock, though well off its highs, is probably going to suffer disproportionately if the US consumer pulls back. Then it's up to Lampert to play the derivatives market in order to make up the slack.

Bringing in Snapper to compete side-by-side with their Craftsman lawn machines doesn't strike me as something that's going to pull SHLD up by the bootstraps.

2008 Jan 10 04:58 PM

[whatajoke:]

While a lawnmower might help Sears, look at all of the retailers whose December numbers were very bad. This will lead to layoffs at retailers nationwide, which will lead to even less consumer spending, which will lead to a lower stock price for Sears and their ego-driven CEO. If Todd Sullivan doesn't understand this concept people shouldn't even read his columns.

2008 Jan 10 07:21 PM

[Richard Shi...:]

I recently checked out a couple of Sears specifically to see how things wer going, went to one tonight with my daughter (3 year old). The "urban" Sears had Kmart like Women's clothes, a spectacular appliance and tool section (expected that) and some ok kids clothes. The suburban Sears had great kids clothes, the women's clothes were not so low end and had a pretty good men's section. In fact, in both stores, employees were very helpful and very plentiful, the store looked clean which surprised me. I even saw a cardboard box that said "please reuse to save expenses" and a message came on telling all employees to tidy up and clean restrooms.

I was really impressed with the merchandise and the store overall and the thing that made the whole experience the most pleasant in both cases:

Besides the dozens of helpful employees in every corner, I WAS THE ONLY ONE THERE. To be fair, they tell me that weekends are busier.

Great merchandise + no customers = inventory issues + no profit

2008 Jan 11 12:47 AM

[BSCLossMan:]

I'm interested in SHLD, but Mr. Lampert is missing what I think is a very important point: Sears stores are old and ugly. And as mentioned in other comments, KMART is worse. If Lampert is doing a mini-hedge fund play, that's one thing, but I think it's trouble for him to completely overlook the lack of attractiveness of the stores themselves, as, bottom line, SHLD is still a series of stores.

2008 Jan 11 05:36 AM

[jim s.:]

Another thing I forgot to mention is Sears and Kmart's increasing irrelevancy in busimess press. I've noticed this several times; a story about the progress of retailers (of which there have been many recently) will list how things are going at WMT, TGT and then maybe KSS and some apparel retailers, etc., but rarely do they mention SHLD stores. For example, just looking at linked in stories from Yahoo! today, there's a bunch under the Summary pages for WMT, TGT, M, etc. Not a one for SHLD.

From my own perspective, Sears' assets are its tools (hand tools, not power tools which are by and large not premium quality), power equipment and appliances. In all those categories they have stiff competition from HD and Lowes, not to mention the smaller players like True Value. On the rest of their inventory, the big boxers are in a full court press.

Frankly, I don't see how they can keep it up.

2008 Jan 11 10:07 AM

[User 82126:]

You must be kidding! High-end brands?? Going to Sears is like shopping 'in the hood'. The only people there look more like they're looking for things to steal rather than buy. And why would you buy the high-margin appliance products there when you can get them for less elsewhere? Why would people with enough money to buy up-market brands shop in Sears? Seriously - It's like Walmart trying to sell Armani.

2008 Jan 11 05:06 PM

[todd su:]

jims,

that is because sears does not release monthly #'s. if they do not put out a press release, the media has nothing to comment on'

2008 Jan 12 04:57 PM

[todd su:]

if you compare shld to its main competitors, JCP, KSS, M, even HD or Low, they are all down about 50% this year give or take a few point.

now, who has the strongest balance sheet of the lot? SHLD by a mile..

the others are loaded with debt and have almost no cash. that being said, shld will weather any downturn far better than the others....

do not forget the magically shrinking share count... when retail turns as it will for all of them, SHLD's eps will explode

2008 Jan 12 05:01 PM

[todd su:]

User,,

craftsmen and kenmore are the best brands any of them sell. land's end? far better than the apparel at the others..

2008 Jan 12 05:03 PM

[todd su:]

Rick,

is anyone shopping anywhere other than walmart?

2008 Jan 12 05:03 PM

[todd su:]

whatajoke,

not sure what you point is. i think you missed mine in the post...

notice i said "long term" not "next two weeks" ??

2008 Jan 12 05:05 PM

[jeffdmich:]

Sears is like going to a old deserted town. You can put a fork in them its over.

2008 Jan 13 01:33 PM

[jim s.:]

todd su,

Thanks for pointing out that SHLD doesn't release monthly numbers. But the effect is certainly that they don't show up in the business press.

And given today's announcement, and previous earnings releases, I can see why they play it close to the chest; no need for a steady stream of bad news.

As to the claim of a rock solid balance sheet, I see that their net tangible assets have gone from $7.8B to $5.7B over the past three quarters, while their cash has gone from $3.4B to $1.4B in the same time period. Could it be that SHLD is signing its own death warrant by repurchasing shares at elevated prices?

Then there's the issue of the underlying business. It keeps going down, down, down. There's nothing in the Craftsman line that competes on quality with the name brands at HD and Lowes, except hand tools. Appliances? Whatever. Lands End? A fine name, to be sure, but on our mall L.L. Bean has just opened up a store and it's a doosey. There's just no comparison between Lands End section in Sears to the L.L Bean store, which is like an outdoor experience right there on the mall. While this certainly can't be happening at many Sears stores, it's sure a stick in their eye here in Albany, NY. Though L.L. Bean may regret their expansion soon enough too.

2008 Jan 14 11:29 AM