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What's next for Sears, Kmart?

Merging mall anchor Sears, Roebuck and Co. with shopping-strip discounter Kmart won't happen overnight. But some details emerged as executives of the chains took the wraps off their $11 billion deal today.

Q. Will some stores close?

A. Yes. Sears and Kmart execs will look at the combined company's 3,500 stores with an eye to sell off or lease "non-strategic" locations. That could be less-attractive stores, or possibly even mall anchors that would fetch a better price from another chain.

Q. What about Sears' Hoffman Estates headquarters?

A. Hoffman Estates will be the home of the merged operations.

Q. Will there be layoffs?

A. "There will be some head count changes that come out of this," said Edward Lampert, chairman of the combined company. He offered no details, but most pink slips are likely to come when stores are closed, and in consolidating Sears' Hoffman Estates and Kmart's Michigan headquarters.

Q. Will this mean lower prices at Sears?

A. One goal of the Sears-Kmart pairing is to save $500 million through combined buying power and slimmed-down distribution. That could make both stores a more formidable competitor to discounters like Wal-Mart as well as department store chains such as Kohl's.

Q. Will Kmart stores convert to Sears stores?

A. The two chains will remain separate operations. But Sears wants to add many more off-the-mall locations, like its Sears Grand store in Gurnee. And Kmart is where it will find them.

Already Sears plans to convert 50 Kmart stores to the Sears brand by April, part of a separate deal it made for the stores in September. They include stores in Palatine, Crestwood and Willowbrook. Any more conversions are likely to come much later.

A half-dozen converted Wal-Mart stores, including one in Downstate Pekin, are part of the Sears off-mall expansion, too. The Pekin Sears store, which opened Nov. 8, is the model for how smaller, off-mall Sears stores will look.

Q. Will some Sears stores turn into Kmarts?

A. It's less likely that Sears will go Kmart. Lampert said Kmart doesn't make sense as a mall anchor. It's going to be on a "store-by-store basis," he said.

Q. Will I be able to be able to buy Craftsman tools at Kmart?

A. Executives said the two chains would "cross-merchandise" at each other's stores. That could include not only Craftsman but Kenmore appliances—already sold at Sears' Great Indoors home centers —and DieHard batteries. All three were identified in the merger announcement as "key" brands.

Sears also owns the Lands' End, Covington and Apostrophe clothing lines, which might make sense in Kmart's apparel-heavy mix.

Q. Will Martha Stewart show up at Sears?

A. Martha Stewart herself is out of circulation for a while, but her home furnishings line is a good bet for Sears. It already sells Martha Stewart Everyday goods in Canada, and her brand of paint is featured at the Great Indoors.

Sears likely would have to work out a deal with Stewart's company, but her company's stock is already rising on the prospect of more Martha at more stores.

The announcement specified that Kmart would continue selling not only Martha Stewart Everyday, but also its Joe Boxer, Jaclyn Smith, Route 66, Thalia Sodi and Sesame Street items.

Q. So, will Sears look more like Kmart or Kmart look more like Sears?

A. A little of both. The Sears Grand stores, which have groceries and other everyday items, are already closer to the Kmart mix, and some items like home electronics have sold so well there that mall stores have expanded their offerings. Kmart also sells things like drugs and health-and-beauty aids that Sears may add.

Sears wants to keep itself as a step up from discounters like Kmart, but there's a lot of room for Sears to steal market share from the likes of Target and Wal-Mart.

Q. What about the Sears Tower?

A. These days it's just another incredibly tall building, and not the world's tallest at that. Real-estate investor Joseph Chetrit bought it earlier this year, but Sears long ago moved its HQ to Hoffman Estates.

Copyright © 2014, Los Angeles Times
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