Sears/K-mart to Merge

[VaSteve]

Weird. I give it 5 years for the Harvard MBA case to come out analyzing this as a bad idea.

I'm guessing next is: Walmart/Home Depot and Target/Lowe's.


http://story.news.yahoo.com/news?tmpl=story2&u=/ap/20041117/ap_on_bi_ge/kmart_sears_merger

[BGCarrera32]

I already think its a bad idea...

2 declining companies that have no idea that they are behind the times will merge very possibly propelling themselves deeper into it.

[Rot 911]

Maybe good for K-Mart, but like BG says, this will only add to the decline of Sears.

[304065]

Disclosure: I own WMT
Disclaimer: This is not investment advice. Put your money into your Porsche instead.

The headline on Drudge read: "SearsKmart to take on Wal-Mart."

I think that's a little far fetched. Aggregation of assets is NOT consolidation. They are going to continue to operate under two brands.

There's a lot of attention being paid to WMT lately, I heard a hit piece on public radio last night describing the INTENSE use of information technology at WMT. WMT are MASTERS of things like supply chain management, and use CPFR (collaborative planning, forecasting and replenishment) technology to ensure that products are in stock. When's the last time you saw an empty shelf at WMT? (OK, except for when they have a special promotion on Mobil 1, and all the 'Heads buy it up)

The point is, if they are combining to take advantage of shared SG&A (still keeping admin facilities outside Chigago AND Troy, MI, so query how much synergy there is there) or purchasing power from suppliers, well, maybe. But they have a long way to go to match WMT's pervasive use of technology, culture, and power over suppliers. To say nothing of challenging WMT's powerful brand, particularly in light of the difficulties K-mart has experienced.

I'll wait for the first quarter as a combined entity to express further judgment.

[M.D. Holloway]

Open Question - Why do you think K-Mart failed?

[Superman]

Actually, I think it's a great move for both companies, and one that surely anyone should have been able to predict. And I'd say it's very possible that this new company can parlay the new assets into ongoing success. Potentially.

Recently, I was reflecting on the insurance industry. Probably in my lifetime, I am confident we will see competition in the insurance industry fall because of its tendendy toward monopoly, landing of course on oligopoly, which is still the wrong structure for this industry. I think we're going to see scandals that make Enron look like a lemonade stand operated by nuns. I think the insurance industry is going to teach ordinary Americans what "anti-trust" laws are for.

[BGCarrera32]

K-Mart= poor merchanidising and retail display, poor supply chain management, crap service

Sears= sale of Sears Credit as most profitable unit of the business resulted in net loss, same old store layout that hasn't changed in 20 years; Menards, HD, Lowe's competing with them for Appliances and Tools, crappy merchanidising of clothes and apparel

Tend to agree this won't go well...

[304065]

Actually, I think it's a great move for both companies, and one that surely anyone should have been able to predict.

Uh huh. I suppose if you buy the "failing company doctrine" exemption to the antitrust rules. But one ordinarily wouldn't foresee the merger of two of the four largest retailers, and I would add that this deal still has to pass HSR.

How many shares are you long?

And I'd say it's very possible that this new company can parlay the new assets into ongoing success.

What new assets? This is an aggregation of existing assets. And bigger doesn't necessarily mean better.

I think the insurance industry is going to teach ordinary Americans what "anti-trust" laws are for.

Uh huh. Sounds like 1890 all over again.

For someone of your stripe, I am frankly shocked that you would support a consolidation like this. No doubt thousands of people will lose their jobs as a result of the inevitable elimination of duplicate positions at each firm.

[widebody911]

I'm not an economist or a marketeer (but I did stay at a Holiday Inn once).

Competition and failure to adapt. In the Olden Days, Sears was the place to get appliances and tools, K-Mart was the place to get cheep basic day-to-day stuff. Now you have WalMat and the IndoChina invasion, you can get appliances at HomeDepot, Lowe's, Fry's, etc. Harbor Freight for tools.

[VaSteve]

Originally posted by john_cramer

There's a lot of attention being paid to WMT lately, I heard a hit piece on public radio last night describing the INTENSE use of information technology at WMT. WMT are MASTERS of things like supply chain management, and use CPFR (collaborative planning, forecasting and replenishment) technology to ensure that products are in stock. When's the last time you saw an empty shelf at WMT? (OK, except for when they have a special promotion on Mobil 1, and all the 'Heads buy it up)

We had a presentation from a vendor that provides/manages WMT's Data Warehouse. They will tell you the stories about how on Sept 12, they could track the "supposed" sales and needs of gas cans, duct tapes and plastic wrap and really determined that the flags were the big seller and where.

Most of WMTs suppliers are Wal-Mart's b*tch. So to speak.

[island911]

my 2 cents:
Sears has been doing some things right, recently. Some smart marketing, and now they are better positioned to compete w/ WMT on the power over suppliers.

otoh, their sales floors still seem to have an old culture. . .that may be tough to overcome.

[304065]

We had a presentation from a vendor that provides/manages WMT's Data Warehouse. They will tell you the stories about how on Sept 12, they could track the "supposed" sales and needs of gas cans, duct tapes and plastic wrap and really determined that the flags were the big seller and where.

Well put Steve.

They evidently know sales to the SKU level down to the minute in each store. That's cool, but the impressive thing is actually being able to USE such information in real-time to drive sales.

They also mentioned that there had been a paradigm shift in power from manufacturer dictating price, quality and delivery terms to the retailer dictating those terms. At which my instant BS detector switched on, as the Big 3 automakers have LONG been dictating such terms, and paying in 120 days besides. But certainly WMT has become a master of doing so in their own right.

[Z-man]

Maybe the merged company should be called Sears-Mart, or S-Mart for short:

From one of my favorite movies
Shop Smart - SHOP S-Mart!

-Z, looking for his BOOM STICK.

[SteveStromberg]

I am kicking my self in the head. I was going to buy20,000at $.41 but got talked out of it. 20,000 x $117 = $2,340,000 DOH

[John Brandt]

So if it doesn't work out, what do you guys think is going to happen to our lifetime warranty on the Craftsman tools?

[BlueSkyJaunte]

I thought Lowe's was owned by WMT?

[304065]

WMT owns Sam's Club. Lowe's has been an independent company since 1952.

[cegerer]

"I am kicking my self in the head. I was going to buy20,000at $.41 but got talked out of it. 20,000 x $117 = $2,340,000 DOH"

Same here!! Should have hung on to my Kmant stock afterall. Bought and sold it 3-4 times over a period of about 8 months right after they went in the tank and nearly tripled my money ..... this would've been better yet

[azasadny]

Two smaller crappy companies are now one large crappy company...

[legion]

I'm sure I'll hear plenty about this at Christmas as my aunt works for Sears and my grandfather retired from there.