Sears explores options for two businesses

Sears Holdings Corp. on Thursday said it would seek partnerships or other arrangements to expand its home-improvement service business and some of its best-known brands.

Investors were cheered even though the U.S. retailer reported a bigger quarterly loss and said its chief financial officer would step down.

The company will look for deals to expand the Sears Home Services business and the unit that houses the Kenmore appliance, Craftsman tools and DieHard (KCD) vehicle battery brands beyond its Sears and Kmart stores.

'Sears has not shown any signs of improvement, but investors have been looking for ways to extract value out of the business, and the potential brand partnerships will help with that,” said Neil Saunders, chief executive officer of retail consultancy Conlumino.

He said the brand partnerships could yield some additional revenue and cash, but the move could 'represent the beginning of the end for Sears as it starts to sell off its family assets in a bid to ensure that it remains solvent over the medium term.”

Once the largest U.S. retailer, Sears has lost its standing as customers move to online shopping or rivals such as Wal-Mart Stores Inc.

Sears has lost more than $8 billion over the last five years. The company has managed to post a quarterly profit just once in the last four years.

On a prerecorded conference call, Sears said it did not intend to borrow money to fund operating losses and expected to close unprofitable stores more aggressively. The main focus this year will be to generate positive earnings before interest, taxes, depreciation and amortization, it said.

Kenmore's share of the major appliance market dropped to 12.7 percent for the 12 months ending in March, down from 17.4 percent five years ago, when it had the largest slice of the market, according to Louisville, Ky.-based Stevenson TraQline's quarterly market survey. But it's still the third-biggest player, behind General Electric and Whirlpool.

Craftsman still accounts for the largest share of the hand tools and accessories market by dollar share, with about 28.5 percent, and accounts for about 9 percent of portable power tool sales, with both categories down between 4 and 5 percent over the last five years, said Stevenson TraQline.

DieHard had only about 5.2 percent of the auto battery market, according to Stevenson TraQline, though nearly 30 percent of people surveyed said they didn't know their car battery brand.