Resets have Sears bullish on home

HOFFMAN ESTATES, ILL. — Home fashions was a bright spot in a dark second quarter for Sears, with consumers responding favorably to the store's initial efforts of revamping its home fashions offerings, said Alan Lacy, chairman and CEO.

"I am encouraged by early results of the major merchandise category resets occurring in our full-line stores," Lacy said.

"Within home fashion, we continue to observe strong sales results within the product categories that were addressed within the first phase of our resets and re-launch of this business."

He said, specifically, Sears' towel business, which was expanded in March, generated comparable store sales growth of almost 20 percent during the quarter, and same-store sales within the kids' top-of-bed category grew by more than 25 percent.

"We look to build on these strong performances as we complete the upgrade of the remaining categories within home fashions and officially re-launch this business this fall," he said.

In other news, the company has several initiatives in the works to improve its inventory management capabilities.

Sears has created a new organization to manage its entire supply chain, including inventory planning and replenishment. Over the next several seasons, it will be transitioning to a new assortment and allocation process to better tailor product assortments based on store-specific demographics.

And it is in the process of implementing an in-season replenishment model whereby stores will receive smaller, initial allocations of product at the beginning of the selling season with subsequent product replenishment occurring based on rate of sale, Lacy said.

The recent creation of the new post, president of Sears retail, is also part of this effort.

Also making the retailer confident about improvements for its future is its off-mall growth strategy.

"We are encouraged by the strong consumer response of the convenience of our Sears Grand format," Lacy said. "Sales are exceeding expectations with higher transactions and higher-than-expected cross-shopping between departments."

He added that, furthermore, Sears' recently announced store acquisitions will expand its points of distribution in key markets.

"Our overall strategy, coupled with our strong balance sheet, positions us to not only fix our business but also, for the first time in many years, to grow," Lacy said.