Sears' plan to sell brands no salve for financial woes

Thu Mar 23, 2017 3:21pm EDT
 
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By Jan Wolfe

(Reuters) - Sears' plan to avoid bankruptcy in part by selling off or licensing brands including Kenmore and DieHard may prove difficult because of changing consumer tastes and possible legal roadblocks.

Sears Holdings Corp, once the largest U.S. retailer, warned on Tuesday about its ability to continue as a going concern after years of losses and declining sales.

The Kenmore brand for appliances and the DieHard brand for car batteries are among the best-known remaining assets of the U.S. retailer, whose roots date back to 1886. In January, Sears sold its Craftsman tool brand to Stanley Black & Decker Inc for $900 million. Sears, which also owns Kmart Corp, has dozens of other in-house apparel and houseware brands.

Analysts in the past four years have collectively valued the Craftsman, Kenmore and DieHard brands at up to $3 billion. However, several industry consultants and restructuring experts said the worth of those assets has declined as Sears has fallen out of favor with consumers. Like their parent, Sears brands are hampered by a perception that they are yesterday's names.

"Sears is serving a customer base that is over the age of 50 or 55," said Doug Stephens, an independent retail industry consultant. As younger consumers increasingly embrace "smart appliances," they do not perceive the 90-year-old Kenmore brand as being at the cutting edge of technology, he said.

Sears declined to comment.

Fitch Ratings said in January Sears would need to raise $2 billion in 2017 to avoid bankruptcy and another $2 billion in 2018.

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Sears Kenmore washing machines are shown for sale inside a Sears department store in La Jolla, California, U.S., March 22, 2017.    REUTERS/Mike Blake