The Buzz: Kmart To Sell Stores To Sears

Discussion
Jun 09, 2004
George Anderson

By George Anderson


One thing leads to another. That’s the popular theory making the rounds as analysts and retail industry observers remain on watch for Kmart to follow up its recent $365 million deal to sell stores to Home Depot with a similar arrangement with Sears.


That one successful deal with Home Depot would lead to another is not unusual. What makes any Sears and Kmart transaction different is Edward Lampert.


Mr. Lampert is the chairman and majority owner of Kmart. He also, through his companies, owns an estimated 14 percent of Sears’ stock, making him the single largest shareholder in that retailer.


Barry Klein, chairman of Barry M. Klein Realty Enterprises, told the Detroit Free Press, “I truly don’t know if his priority is making money on the real estate play or turning the company around,” he said. “Mr. Lampert is definitely trying to make money, whether or not he’s selling good locations to other merchants at the expense of Kmart’s future, I don’t know what the answer is.”


Moderator’s Comment: What are your thoughts on a Kmart/Sears deal for stores and Edward Lampert’s influence over the
actions of the two retailers?


We know from discussions and email that some question whether Edward Lampert’s influence in the two retailers constitutes some sort of conflict of interest.


In this particular case, assuming a sale happens, both retailers benefit. Kmart gets additional revenues and Sears gets stand-alone locations that, according
to the company (see RW 5/14/04, Sears Does Better Alone), outperform mall-based stores. Not everyone, however,
agrees with Sears’ assessment on that matter.

George Anderson – Moderator

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