SEARS AUTO CENTERS
Sears, Roebuck & Co. is a chain of department stores located primarily in shopping malls.
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
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
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.
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
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.
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
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.