Company Analysis: Sears Holding Corporation Essay

Company Analysis Sears Holding potbelly stove Abstract Sears Holdings Corporation (SHC) is the nations fourth largest broadline sell merchant with approximately 3,900 full-line and specialty retail shop classs in the United States and Canada. Formed in the later part of the ni pelfeenth century it was the largest retail company in the country until the other(a) nineties. SHC is soon the leading domicile appliance retailer as unscathedsome as a leader in alikels, lawn and garden, mansion electronics and self-propelled repair and maintenance. As a result of its amalgamation with Kmart in two hundred5, SHC in same(p) manner has Martha Stewart Everyday intersections, which argon offered exclusively in the U.S. by Kmart. SHC operates through its subsidiaries, including Sears, Roebuck and Co. and Kmart Corporation. In recent years Sears has undergone major changes in order to maximize its increases and beat its competitors. In the past several decade Sears has been the fundament to go shop for home goods, clothing, and physical fitness equipment and auto repairs. As time progressed they became very comfort adequate to(p) with what they difficult as other companies much(prenominal) as Wal-Mart, channelise, Lowes, JC cent crept in and reaped a chunk of its commercialize. In a struggle to re-invent itself, it tries to maintain focus on its primary feather and secondary target markets.Introduction The Sears Holding Corporation is a multinational smoke with retailers purchasing products in the United States, Canada, Mexico and Puerto Rico. It is the fourth largest retailer within the United States, with everywhere 3900 locations and sells many different marketable goods for consumers. These goods complicate products such as tools, seted clothing, appliances, sporting goods, electronics, home maintenance and repair, and automotive from many different retailers (http// www. searsholdings. com/). The Sears Holding Corporation is a result of th e nuclear fusion between Kmart Holding Corporation with the Sears Roebuck Co. which occurred in 005, and the headquarters is located in Hoffmann Estates, Illinois. The consolidated subsidiaries include Sears, Roebuck and Co. , Lands end Inc. , LRFG, LLC, Sears Brands, LLC, Sears Canada, Inc. , Sears Financial Holdings Corporation, Sears Reinsurance Company, Ltd. , Kmart Holding Corporation, Kmart prudence Corporation, Kmart Corporation, and the Sears Holdings instruction Corporation(http// www. secinfo. com/dVut2. v3ap. 5. htm1stPage). Brief History The Sears Roebuck Corporation was founded by Ric lowering Warren Sears and Alvah C. Roebuck in 1893.Sears started as a Jeweler who made a profit by sell watches. The nigh innovative and quite possibly the most famous method acting of exchanges synonymous with Sears was the Sears Catalog. Providing pictures of the products, the prices, and a handy item that could be tell on a regular basis for sales was by off the beaten track(pr edicate) an ingenious method of marketing. Consumers would be able to purchase items with no markup, develop knowledge of their budgets required for purchases, and be somewhat assured of the quality of the product based upon the appearance, marketable ideas and mainly products which could be sold, consequently expanding Sears enterprise.Mainly from the early 1900s through unwrap the 1980s, Sears maintained its tronghold in Americas consumer market, in particular in the 40s and 50s with its tremendous expansion. However, towards the 90s and 2000s, as many other tough businesses arrived, divestiture, as well as problems associated with employee wage issues, Sears marketability dropped off until its merger with Kmart in 2005 (http// en. wikipedia. org/wiki/Sears). Kmart first open in 1962 and was founded by Sebastian S. Kresge.It was a relatively successful corporation and applyd marketing ideas within the store, namely Blue Light Specials which would entice clients to urchase t he unconsecrated light or give the sacked items while they were shopping for their products. Unfortunately, repayable to failed ideas regarding consumer marketing, failure to utilize the computer technologies for supply chain management, and other setbacks, Kmart had to declare bankruptcy in early 2002. (http//en. wikipedia. org/ wiki/Kmart). Merger The merger between Kmart and Sears clearly enhanced two of the companies mutual progressive goals.Sears invested many assets in the course of instructionation of Sears Grand stores, large off store m every last(predicate)s, and in the process bought many of the Kmart locations which were going out of business. Therefore the merger helped this process so that it would enable the further return of Sears at a quicker pace as well as enhance the productivity and save the Kmart Corporation. This was clearly a strong ratiocination made by the executives in combining forces so that the marketability of both companies would summation. on with this, the shareholders could make a tremendous profit with this alliance.Prior to the merger, if the independent companies were non steadily increasing their revenue shareholders would lose money from their investments. The combination of both of the corporations would mprove shareholder investment returns and gum olibanum facilitate the maturation of the Sears Holding Corporation. The more(prenominal) investors receive higher returns, the greater investments into the company thusly fostering its general growth. The proprietary brands, selling the aforementioned products, under both companies would be able to r individually the target demographic groups with greater ease.The real estate holdings of idiosyncratic Kmart or individual Sears stores, now under the umbrella of the Sears Holding Corporation, could be leveraged, thus enhancing the ability to sell more of their combined products to a massive variety of consumers. This was reported to increase revenue by roug hly 200 million dollars per year. Along with the increase revenue, a simplification in overall cost for maintenance of both corporations due to the merger would save nearly 300 million dollars per year (http//en. wikipedia. org/wiki/ Sears_Holdings_Corporation). A general projected net increase of 500 million dollars per year is a phenomenal growth rate.As mentioned previously, a global dissemination of these stores in the North Ameri smoke continent (from Mexico to Canada) has enabled the Sears Holding Company to expand even further. Leadership Overall, this merger helped Sears Holdings Corporation be a force in the United States market. As the eighth largest company in the US, the profits and revenue oblige increased tremendously, but the lack of leaders and the incessant changing of executive authority has been a preventative factor in its further growth and meat that a company placenot initiate rude(a) marketable strategies that leave behind let to fruition.Employee s tability and satisfaction in a large company is unendingly an issue as well, because Job security is always in interrogative sentence when companies merge. Another tweakside to such mergers means that the people in executive positions tail relocate o other positions at different companies, and strategies that were used to place a single company might not work due to multiple variables involved to create a go company. Initially, the decisions to run the Joint company might cause disagreements that might not necessarily increase the percentage of revenue on an annual basis.However, after testing market strategies over a period of time, implementing different methods to sell products, and keep investors apt by generating profits on a yearly basis, the company will eventually succeed through innovation and investment. SHC faces stiff competition from big box retailer such as Wal-Mart and Target. In the mid-tier its competitors include Macys,J. C. Penny and Kohls. Organizational S tructure SHC recently implemented an organizational structure and run model that aids in the management of its several business lines thus creating autonomy and focus for business social unit management teams.This 5 unit structure enables each organization to focus on their core capabilities and categories which are support, operational business, brands, online, operating business and real-estate. These support units entrust administrative and operating(a) support to the areas of arketing, store operations, guest strategy and finance. Each unit thus comes with a designated leader and an advisory group which is composed of Sears Holding executives. cock-a-hoop autonomy to each unit futures the business by allowing them to focus on management and profitable of that Unit and the company as a whole (Reuters 2008).With these changes I believe SHC will be bust placed to struggle and maximize profits. Target market The primary target market for sears is arguably home owners between the ages of 25 to 55 with a moderate home income 25,000 to 60000 dollars. Homeowners make he majority of the population shopping at sears stores. This accounts for the sale in the hard lines department. Sears provides home improvement solutions to this group of people. This group is attracted by products such as home appliances, entertainment centers, home d?cor, and fitness equipments.The main draw to these customers is home appliances and lawn and garden tools. This is so because Sears has a temper for Secondary market targeted by SHC consists mainly the younger generation. In an trial to bring itself up to par with its competitors, they have been providing brands and clothing items in the slow lines department. This group consists of school age children (4-18). Sears offers products like the kids advantage program where parents can purchase shoes for their kids and be able to switch it for a new pair sometime down the road.Last year Sears teamed upped with LL Cool J and MTV to provide the LL Cool J brand call forth to the teenage population. This brand resonates break off with young African American and Latino teenagers. Competitors In the hard lines division sears faces major competition from hardware retail giants such as Lowes and Home Depot. These two have managed to cut off some primary more variety home improvement products than sears. Their yearly sales military position better profits than SHC. The soft lines department faces major completion from JC penny, Macys, Target and Wal-Mart.Macys and JC Penney have managed to chip away some of the market by providing better quality brand named apparel such as Liz Claiborne, muff Phat, and Anne Kline to these customers. Both companies have managed to post better revenue than SHC the previous quarters. sell Giants such as Wal-Mart currently (currently No. 1) and Target in addition provide stiff competition for SHC. These two also have managed to fair better than Sears during this harsh economic p eriod ith Wal-Mart providing a variety of products at ace low prices, while target provides more quality apparel at equivalent prices.Recent Performance The company testifyed revenues of $46,700 million during the monetary year (FY) ended January 2009, a decrease of 7. 8 % over 2008. The operating profit of the company during FY2009 was $251 million, a decrease of 83. 8% from 2008. The net profit was $53 million in FY2009, a decrease of 93. 6% over FY2008. The decline in operating and net profit was due to decrease in gross margin and higher impairment chargers. Stock merchandise Chart SHC http//www. reuters. om/finance/ businesss/chart? symbol=SHLD. OQ The graph chart supra illustrates how SHC has performed in the stock market since the merger in 2005.SHC has retardn a constant struggle since the merger, the highest grossing year being 2007 when SHLD stock went for $ 190 and currently at $78 thanks to the current economic crisis. Of all the revenue grossed by SHC in recent and past years only 11% comes from Sears Canada inwardness the most of SHC revenue is generated here at home 55% form Sears domestic and 34% from Kmart as demonstrated by the Pie chart below. http//www. wikinvest. com/stock/Sears_Holdings_(SHLD) SWOT Analysts For decades the hard-lines department brought the highest revenue to the business and is considered one of the strengths of sears.Here we see the power of Sears owned brand named products such as Craftsman, Kenmore and the usual home improvement tools and equipments. Such are products that are nationally recognized as very reliable tools. In the soft-lines department sears brands such as Lands End and Diehard are also heavy sellers and nationally recognized. One other strength of sears is that it is dedicate to its community and customers. Sears has taken upon its self to provide honor in customer services and for years has had a tring of dedicated customers. Sears is also involved in serving the community and helping the less f ortunate.Programs like Heroes at Home and Extreme Makeover Home Edition has Sears written all over it. This dedication to the community has help exposed it to consumers The weakness of this corporation stands from what may have been one of its strengths. Though it has a large customer base, Sears has allowed its sales volume to plummet because they are not keeping up with the changing market environment. They have lost touched with the consumers and competitors when it comes to soft- ines (clothing) and some hard-lines divisions. Sears has undergone too much diversification and has thus lost focus on retail services (Prentice-Hall, 2003).Most of it retail stores today are not pondering of the needs of the consumer. Sears clothing line is old, outdated and out of touch with forge trends. Currently retail stores are old worn out and do not attack customers. At present its current CEO has been retardation so for 18 month indicative of managerial or leadership problems (Gorenstein 20 09). Opportunity The merger of K-mart in 2005, was thought be the silver bullet that would revamp he company, providing a variety of products and obtain an expanded customer base. So far SHC has post several quarterly losses with the most recent of 94 million dollar (SHC 2009).Sears has the opportunity to revamp or improve sales in the soft-lines department by buying and capitalizing on brands such as Liz Cleburne, Nine West that are appealing to customers. They currently have brands such as LL Cool J and Joe Boxers that are thriving in the male department. For the Hard-line department, while it is thriving sears can still provide affordable and durable products with the kind of guarantee that they have for Craftsman tools. In general a change to memorial that appeal to the consumers will bring in revenue and make Sears a better competitor.Threats Like any other company in business Sears faces a constant threat from its competitors. Sears current faces threats from retail giants s uch as Wal-Mart and Target. more over departmental stores such as Macys and JC Penny are also fighting for its customers. It is worth noting that all these business were babies compared to Sears in the past. More discount stores are opening further driving down sails in certain(p) departments. Sears risk losing its customers if it doesnt re-invent the stores o provide items that appeal to them.The economic down turn hasnt been fair to SHC as they have posted record losses for the whole year and until the situation improves SHC has to take steps to edit cost and increase profits or revenue. Supply Chain Management Sears main focus when supply chain management is concerned, is to replenish its inventory as quickly as possible. SHC has 3 basic products seasonal products such a s lawn mowers and snow blowers, perennial best sellers and fast base products that need to be replenished rapidly. Unlike many of its competitors, SHC provides 6 illion home appliances/home improvement deliver ies directly to customers homes every year.To do this effectively SHC uses Cross-docking which is a slip of distribution in which inbound products are unloaded at distribution centers, sorted by destination and then loaded onto delivery trucks. then the goods are not warehouse i. e. they are Just moved crosswise ducts This reduces the days in inventory positioned its inventory in 4 regional warehouses so it can provide next-day delivery to it customers and quickly replenish store supply. Recommendations How can we stars fixing the problems faced by sears? Starting from the top, a abiding CEO, not another Interim should be put in place to take charge of long term decision making.An environmental compend would help Sears see where it is and help guide it to where is should be in the market place. Showing them who their customers are, what the customers want and how they can out-beat the competition for more customers. It is no privy that the brands and styles in the soft-lines de partment have to be ever changing to appeal to customer in time. SHC needs to invest more money into remodeling each departmental store, making it easily accessible and more appealing to consumers. In light of the fact that SHC has lost touch with its customer base, decentralization should be considered.This will allow specialty stores that carter to consumers in each region thus increasing customer base and revenue. References About Sears Holding Corporation (2009) Retrieved kinsfolk 4, 2009 from websitehttps//searsholdings.com/abouthttps//searsholdings.com/about/kmarthttps//www.forbes.com/fdc/welcome_mjx.shtmlhttp//wps.prenhall.com/bp_beekman_compconf_6/http//ru.reuters.com/http//www.searsarchives.com/history/history1886.htmhttp// www. wikinvest. com/https//searsholdings.com/http//archives.chicagotribune.com/