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SEARS AUTO CENTERS 1 ⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯⎯ Sears, Roebuck & Co. is a chain of department stores located primarily in shopping malls. Sears stores carry clothing, jewelry, home appliances, hardware, lawn and garden supplies, sporting goods, automotive supplies and repair, office supplies, electronics and school supplies, many products under its own brands. Founded in 1886 as the R.W. Sears Watch Company, by the 1990’s the company’s merchandising operations had grown to over 850 department stores (115.9 million gross retail square feet) and almost 600 Western Auto Stores. Sears encountered a very difficult year in 1992. The company reported a $2.3 billion loss from continuing operations ($3.9 billion net loss after discontinued operations and cumulative effect of accounting changes on revenues of $52.3 billion (see appendix for selected financial information). While 1990 and 1991 produced dramatically reduced income from continuing operations, this was Sears’ first loss since the Great Depression in 1933. A continued US economic slowdown affected Sears’s 1992 financial results. 2 Also affecting its financial results was restructuring Sears Merchandising and several unusual factors ranging from Hurricane Andrew to a major one-time change associated with the adoption of new accounting standards for post-retirement and post-employment employee benefits. * Prior to 1992, Sears organized its principal business into four major groups: Sears Merchandising, Allstate Insurance, Dean Witter Financial Services and Coldwell Banker Real Estate. During 1992, Sears underwent sweeping changes, with the goal of shaping a stronger company and enhancing shareholder value. The primary objectives underling these changes were a strategic repositioning to concentrate on core retail and insurance businesses, to strengthen its balance sheet, and to improve its financial flexibility. In September 1992, Sears spelled out a repositioning of the Company that included: Dean Witter's sale of 20% of its stock to the public and a distribution of the Dean Witter stock held by Sears to Sears common shareholders; The offer by Allstate of up to 20% of its stock to the public; The sale of Coldwell Banker Residential Services. Sears reorganized its Merchandising Group into the Retailing Group – which operated Sears’s retail facilities – the Business Centers, Sears Specialty Merchandising, Catalog Operations, and Product Services. As the Sears’s 1992 Annual Report indicates: The future success of Sears Merchandise Group lies in providing mid-market consumers great product values and superior service in businesses where we can excel and deliver an attractive return to our shareholders.
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