Mega-Merger Brings Management Shakeup

New York —There will be seismic shifts among senior executives and middle managers immediately following the Sears-Kmart merger into the new Sears Holdings, according to documents filed with the Securities and Exchange Commission last week.

Some of those changes may already be in evidence with the announcement also last week that the architect of Sears' off-mall strategy, executive vice president and general manager Jerry Post, a 38-year Sears veteran, will retire after the merger with Kmart.

In a series of questions and answers for Sears' employees posted on an internal Web site and filed with the SEC, the company referenced a recently announced field restructuring and said the new senior level management would be announced “at or shortly after the merger's close.”

“These senior executives will move rapidly to appoint vice presidents and directors, who will then work on staffing the organization at the headquarters office,” the company stated.

The filing preceded by two days Kmart's announcement that roughly 400 of its stores — about a quarter of its store base — would be converted to the Sears Essentials format within three years of the merger's close.

The bulk of Sears and Kmart stores will continue to operate separately under their own brand names after the merger, and the impetus of the new restructuring is aimed at better supporting existing Sears stores, the filing said.

The new structure creates eight regions and 110 districts, each composed of six to nine stores.

A director of stores — a new post — will manage the stores in each district and report to a region vice president. An assistant director of stores will be created in 16 districts.

The new field organization will continue to have specialized support for automotive, loss prevention and facilities.

The company said that while transition planning teams are continuing to address issues such as supply chain and systems integration, along with plans for the conversion of the first 25 stores to Sears Essentials, full systems integration and migration is expected to take up to two years.

But what of the new cross-merchandising efforts?

“With the timing of the merger, we won't see much impact for the fall (2005),” the company said. “But by spring 2006, however, we hope to have many of our cross-merchandising initiatives in place.”

Post's announced departure follows that of Sears Chief Financial Officer Glenn Richter, who will make way for Kmart's Senior Vice President of Finance William Crowley, also president and chief operating officer of ESL Investments.

ESL is owned by Kmart Chairman Eddie Lampert, the force behind the merger.