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Sears, Kmart to Merge in $11B Deal

By Fred Barbash and Michael Barbaro
Washington Post Staff Writers
Wednesday, November 17, 2004; 1:33 PM

Sears and Kmart, troubled in recent years by lackluster sales, uninviting stores and, most significantly, competition from Wal-Mart and Target, announced a merger today that will create the nation's third largest retailer.

The company will combine by March under the name of Sears Holding Corp., according to a joint press release.

Video: The Washington Post's Jerry Knight talks about the details surrounding the merger of Sears and Kmart.
_____Live Discussions_____
Transcript: New York University professor Yakov Amihud was online to answer your questions on corporate mergers.
Transcript: Hedrick Smith discussed Frontline's examination of the connection between American job losses and soaring Chinese exports -- Wal-Mart.
_____Story Archive_____
Citigroup to Buy Sears Credit Unit (The Washington Post, Jul 16, 2003)
Kmart Emerges From Bankruptcy (The Washington Post, May 7, 2003)
Sears's New Catalogue: Chain Buys Lands' End (The Washington Post, May 14, 2002)
_____On the Web_____
Merger Press Release
Kmart Fiscal 2004 Third-Quarter Earnings Report (Nov. 17, 2004)
_____Company Research_____
Sears Roebuck & Co: Stock quote, company profile and more.
KMart Holding Corporation: Stock quote, company profile and more.
Kmart and Sears: Company Histories and Timelines (Associated Press, Nov 17, 2004)

Together, Sears and Kmart will have about $55 billion in annual revenue and 3,500 retail stores, the announcement said. That will put the new company behind Wal-Mart and Target among U.S. retailers, but by some distance.

Both Sears and Kmart have deep roots in American corporate history.

Sears, Roebuck and Co., founded by Richard Sears and Alvah Roebuck, came into existence in 1893 in Chicago. As the country's first national catalog operation, the Amazon of its time, it became the first cross-country retailer of almost everything, eventually opening catalog stores and then department stores across the country. Many of them fell into disrepair in the 1960s and 1970s, however.

Kmart is a direct descendant of the S.S. Kresge Company, started in 1899, one of the first of what came to be known as the "five and dime" stores. Facing competitive difficulties in the 1960s, Kresge stores opened the first Kmart discount department store in 1962 in Garden City, Mich. For a time, Kmart was considered an innovative retail phenomenon with its big box stores on a single floor with vast rows of moderately priced merchandise.

Both Sears and Kmart, along with other traditional department stores, suffered at the hands of massive shopping centers, where consumers could get the same products in gleaming specialty stores and, most recently, at the hands of giant discounters such as Wal-Mart and Target, with their technology-driven efficiencies.

For Sears, which has nearly 900 mall-based stores, the merger will create an opportunity to migrate into lucrative suburban locations now held by Kmart.

Mall attendance is flagging across the country, analysts say, but suburban strip malls are thriving -- driven by the growth of Sears's competitors Wal-Mart, Target and Home Depot. The combined company will convert "several hundred" Kmart stores into Sears stores, executives said during a conference call this morning.

At a news conference in New York, Edward S. Lampert, chairman of Kmart, said, "We want to make sure that the uniqueness of these brands is preserved, but I would say there's no preconceived notion as to which store is going to be which. It's going to be on a store by store basis," the Associated Press reported.

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