Putting Zip Into Apparel Sales a Priority for Sears’ New CEO
Sears, Roebuck & Co.’s choice of an insider to head the company won plaudits Monday on Wall Street, but analysts said Alan Lacy needs to put some zip into clothing sales if Sears is to gain ground amid fierce competition.
Lacy evidently agrees. A day after being named as president and chief executive for the retail giant known best for hardware and appliances, he said improving Sears’ lackluster showing in apparel is “top of the list” among his priorities.
Lacy, 46, was widely viewed as a safe but sound choice by Sears’ board to replace the retiring Arthur Martinez.
He has handled a variety of top jobs at Sears, including chief financial officer and most recently president of services, heading the company’s huge credit unit and e-commerce efforts.
Drastic new changes probably aren’t likely in the immediate future, however, for Sears’ 860 department stores and 2,100-plus specialized retail outlets.
Like Martinez before him, Lacy takes the helm with little hands-on retail experience. While discussing his plans only in general terms, he acknowledged that he plans to go into “deep-dive mode” to immerse himself in merchandising before taking over Oct. 1 as chief executive officer.
Sears’ stock rose 50 cents to close at $35.25 on the New York Stock Exchange.
Industry experts said the appointment bodes well for Sears’ long-term future, writing off the minimal investor enthusiasm to the market’s tendency to get more excited about outsiders.
“With his proven track record at Sears and his already intimate knowledge of the company, we believe Mr. Lacy is the most qualified person to fill the position,” Lehman Bros. analyst Jeffrey Feiner said in a research note.
Retail consultant Kurt Barnard, president of Barnard’s Retail Trend Report, noted that Wall Street respects and is comfortable with Lacy from his many roles with Sears since 1994, including briefing analysts regularly.
“Alan Lacy knows every little corner of the structure of Sears, Roebuck,” he said. “He has lived the company.”
Merrill Lynch analyst Daniel Barry also is impressed with Lacy but said he must address his lack of experience in a vital area.
“He’s an excellent choice--he’s managed departments that account for well over half the profits,” he said. “But their biggest problem is still merchandising, and he’s not a merchandiser.
“Apparel is the area that’s noticeably weak,” Barry said.
Clothing never was Sears’ top seller even when it was the dominant retail chain, but it has struggled to find its niche with apparel-buyers for much of the last decade.
Although the Hoffman Estates, Ill.-based company remains the runaway leader in U.S. appliance sales as well as a hardware powerhouse, it now has only a quarter the annual sales of No. 1 retailer Wal-Mart Stores and has lost customers to such other discount competitors as well.
Sears already is experimenting with a trendier image in a test at 13 stores in the Midwest.
Sears also has been pushing ahead with its Great Indoors concept, a home-improvement superstore, with the number of outlets going from three to 100 by the end of 2002.
Lacy, who will take on the added title of chairman in December when Martinez leaves, cited the Great Indoors as a prime example of how Sears is “poised for growth in a number of businesses.”
