Sears begins new brand-based strategy

By Brent Felgner -- Home Textiles Today, 3/1/2004 8:02:00 AM

NEW YORK —

Sears was scheduled to embark today on yet another massive repositioning of its bed and bath merchandising program, including the pursuit of a national brands strategy that will initially bring the Martex and Utica labels to its shelves.

The effort will also involve extensive resets of the department in larger stores.

The changes were outlined briefly last Thursday by Alan Lacy, chairman and CEO, during a presentation at the 10th annual Bear Stearns Retail, Restaurant & Apparel Conference, during which he updated Sears' ongoing multi-year effort to reposition its business.

"Home fashions is another category that's getting a lot of emphasis this year," Lacy said. "This has been a tough one for us to get right, but we're focused very much on shop-ability, improving product quality and focusing on better products."

The significance of the changes is that they amount to an almost 180-degree turnabout from the Whole Home/Colormate effort that has been Sears' focus in recent years. It is, perhaps, also an acknowledgement of Whole Home's inability to spark much in the way of consumer interest. Sears' home textiles sales declined 8 percent in 2002, on top of a 2.5 percent slide the previous year, according to HTT's Top 50 Retailers Report.

Lacy didn't articulate whether these changes will mark a complete abandonment of the existing program, or more simply a major amendment to its thrust.

All of the company's soft home merchandising executives, including newly appointed Roger Detter, senior vice president and general merchandise manager, and Barbara Pizzella, vice president and general merchandise manager for home, were said to be in meetings all day Friday and unavailable for comment. Detter assumed the post in late January. Lacy, too, was unavailable.

Rochelle Williams, a company spokeswoman, said the Martex and Utica programs would begin rolling out March 1.

A slide accompanying Lacy's comments showed a photo of a bed and bath department along with just three bullets:

• Refixturing and relaying the bed and bath business in larger stores.

• A "significant repositioning" of merchandise assortments.

• Pursuing key national brands, including the Utica and Martex introductions.

"This is a company that continues to tweak its merchandise assortment, especially in the soft lines, non-hardlines' side of the business," said Jeff Stinson, a retail analyst with FTN Midwest Research Securities in Cleveland, Ohio. "So we will probably continue to see changes from these guys, both major and minor, through 2004, until they feel they have these assortments in the right position."

Are they getting it right?

"It's still early to tell … This is still a company that is learning, so there will probably still be some changes made going forward," Stinson added. He declined to speculate on how much time executives, including Lacy, would likely have to produce results.

The significance that changes in the program are moving forward initially with Martex and Utica — two mainstay brands from WestPoint Stevens — can't be lost, either. The principal investor in both Sears and WestPoint Stevens is Edward Lampert's ESL Investments.

Senior executives at WestPoint Stevens could not be reached either on Friday.

During last fall's textiles' market in New York, WestPoint relaunched the Utica brand with a flourish and a stated intent for it to revisit — and regain — its roots in the luxury segment of the business. At that time, the company included sheet sets in single-pick counts of 400, 500 and 600 threads.

It wasn't immediately clear if the Sears' program would co-brand with Utica, or if programs would appear on the shelves directly out of the showroom.

Lacy told the conference that while the overall consumer and economic environments appear to be improving, their strength and staying power remain uncertain. He did say, however, that he expects the second half of the year to be stronger than the first. He cautiously predicted low-single-digit comparable-store sales gains with "solid" gross-margin expansion and benefits to expense ratios from productivity gains.

The process began two years ago, aimed principally at Sears' off-mall competition and resulted in the launch of Sears' Grand, which Lacy continues to endorse.

The company's focus this year will be on the relaunch of its full-line stores, as well as repositioning, restructuring and producing further growth in its customer direct and home services businesses.

Lacy said the company's database includes 75 million households. The Sears' and Lands' End Web sites, he said, receive 7 million unique visits per month. The Lands' End and Internet businesses contributed $2 billion to Sears' $28 billion in sales last year.