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Sears Grand sales 30% above expectations, chief exec says
Sales at Sears, Roebuck and Co.'s newest store format are 30 percent higher than expected, and even usual trouble spots such as clothing and home-and-bath departments are doing well, the retailer's top executive said Wednesday.
Chief Executive Officer Alan Lacy, speaking at a Wall Street analysts meeting in New York, publicly quantified the sales performance of the free-standing store format for the first time.
"Top-performing businesses include apparel, home fashions, home entertainment and toys," Lacy said of Sears Grand's results.
Early customer satisfaction scores at Sears Grand also exceed those of rival retailers in the neighborhood, he said.
Lacy also updated analysts on some of the proprietary clothing brands in all Sears stores. Clothing sales have been down for three straight months at Sears as the public clamors for trendier clothing, a lineup where Sears has holes.
Lands' End, which Sears bought in June 2002, will exceed $2 billion in sales in 2004, Lacy said. The preppy clothing line did about $2 billion in sales in 2003.
Sears conceded earlier this year that the line had some supply problems that prevented Lands' End merchandise from arriving in stores on a timely basis. On the bright side, more than 70 percent of the Lands' End merchandise in the store is bought at full price, Lacy said.
Meanwhile, Sears' Covington apparel line has seen sales rise by high single digits this year. And Apostrophe, Sears' trendiest line, has seen sales increase by more than 40 percent year over year, Lacy said.
Hoffman Estates-based Sears said earlier this year that sales at its two Sears Grand stores--which peddle everything from appliances to milk to better compete against discounters--have been more robust than expected, but did not disclose how much better.
The first Sears Grand opened last year in a suburb of Salt Lake City and the second opened earlier this year in Gurnee.
While rivals Wal-Mart Stores Inc., Lowe's Cos. and Home Depot Inc. have opened hundreds of new stores a year, Sears' store base has largely stagnated. It consists chiefly of about 870 locations in traditional malls.
At the company's annual shareholder meeting in May, Lacy touted Sears Grand as the "principal store-growth vehicle for the foreseeable future."
He didn't, however, elaborate on how many stores are under consideration. Only five have been announced so far.
But Bill White, general manager of Sears' traditional stores, told Sears retirees on May 12 that there's the potential for up to 500 Sears Grand locations.
And in April, another high-level executive said hundreds of Sears Grand locations are under consideration.
"Some 200 to 300 potential Sears Grand locations have been identified," Tina Settecase, general merchandise manager for Sears home appliances, said in a speech to the Association of Home Appliance Manufacturers in Washington, D.C.
Last week, shares of both Sears and Kmart Holding Corp. had a one-day surge on speculation that Kmart might sell some stores to Sears.
Kmart recently announced a deal to sell up to 24 stores to Home Depot for about $365 million. But to make a purchase like that pay off, Sears needs to get Sears Grand right.
"The expense structure is still not right," Lacy said in February. "The store operates differently than a full-line store, so we're learning."