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Sears to Close 3 Specialty Stores

August 29, 2003|From Bloomberg News

Sears, Roebuck & Co., the largest U.S. department store chain, said Thursday that it would have third-quarter expenses of as much as $100 million to close three Great Indoors home appliance and furnishings stores and eliminate about 350 jobs.

A store in Cincinnati and sites in Houston and Arlington, Texas, will be shuttered by the end of the year. A fourth location in Shelby, Mich., will be converted to a clearance outlet, and the value of other properties will be written down, spokesman Ted McDougal said.

Sears plans to improve distribution and merchandise at the 18 remaining stores, which feature displays of shower heads, kitchen counters, carpeting and appliances.

The home-decorating chain, which was opened in 1998 to help expand Sears' presence outside regional malls, hasn't been profitable yet, said Jeff Jones, senior vice president and Great Indoors general manager.

"Great Indoors isn't good enough to expand and roll out a couple hundred stores," said Wayne Bopp, an analyst at Fifth Third Bank, whose $31 billion in assets include about 244,000 Sears shares.

Shares of Sears rose 4 cents Thursday to $43.69 on the New York Stock Exchange. They've climbed 82% this year, bolstered by the retailer's plan to shed its finance business.

Sears said Tuesday that it expected sales at stores open at least a year to rise in August, the first monthly increase in two years. Sears began selling Lands' End clothing in all of its 870 department stores this month. The company bought the catalog and Internet retailer in June 2002.

The 110-year-old retailer has been experimenting with various formats to revive sales and profit. Sears has dropped businesses such as pest extermination, has remodeled stores and is adding more low-priced appliances.

Shoppers looking for clothing and housewares had turned to retailers such as Kohl's Corp., whose stores are closer to suburban developments and have lower prices, analysts said.

In addition, Home Depot Inc. and Lowe's Cos. have siphoned away buyers of washing machines and stoves, which are among Sears' stronger-selling products.

Great Indoors will add new items, such as boxed sets of wine glasses and tableware, to boost sales, Jones said. And more merchandise will be kept at warehouses instead of in the backs of stores, which will reduce costs.

The chain, which also sells items such as mirrors and lamps, will use more mail and newspaper circular marketing instead of television and radio to advertise to shoppers with incomes of more than $50,000, Jones said.

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