1998 News Archives

Articles and news of interest from 1998 for our narse members:

Article Source Date
The Softest Side of Sears

De’Ann Weimer
Business Week

Dec 28, 1998
This Christmas is Anything But Merry at Sears  

Lisa Morrell
Crain's Chicago Business

Dec 21, 1998
The Enthusiasm, Action, and Flavor of NARSE  Two Newspaper Clips Dec 11, 1998
Must Not Be Employed to Win Steven Strahler,
Crain's Chicago Business
Dec 7, 1998
Executive Exodus Grows at Sears Susan Chandler,
Chicago Tribune
Dec 4, 1998
narse Loses a "True Friend" Tom Dowd Dec 4, 1998
IRS - Good News!   Tom Dowd Dec 4, 1998
Sears Disappoints at Start of Holiday Season  

Susan Chandler,
Chicago Tribune

Dec 2, 1998
Inside Retailing   Susan Chandler,
Chicago Tribune
Nov 21, 1998
Home Life Sold to Citicorp   Susan Chandler,
Chicago Tribune
Nov 20, 1998
Stuff You Need to Know    Tom Dowd Nov 17, 1998
"Let's Add Insult to Injury"    Tom Dowd Nov 17, 1998
The Packman Family Tom Dowd Oct 28, 1998
Sears Creates New Post to Boost Sales   Chicago Tribune Oct 27, 1998
Lawsuit Update Tom Dowd Oct 17, 1998
Tire Balancing Lawsuit Tom Dowd Oct 5, 1998
A Visit to the “House of Deception” Tom Dowd Oct 5, 1998
NARSE on Chicago Cable TV Tom Dowd Oct 5, 1998
Update on Class Action Law Suit Tom Dowd Oct 4, 1998
Unsung Heroes Tom Dowd Sep 11, 1998
Sears Sees $250 Mil Loss in Sale of Western Auto Investors Business Daily Aug 19, 1998
A Warm California Welcome for the King Tom Dowd
Torrance Sears Store
Aug 13, 1998
Virginia Beach Club Tom Dowd Sep 11, 1998
Advance Buys Sears' Western Auto George Gunset , Chicago Tribune Aug 18, 1998

Sears CEO Loses Key Player

Susan Chandler and Sallie L. Gaines, Chicago Tribune Aug 13, 1998

Ex-Sears Exec Heads Bus. School

Cranes Chicago Business
Aug 10, 1998
The Revolving Door Goes Round Boston Globe Jul 24, 1998
Cries and Whispers Marc Spiegler, Chicago Magazine Aug, 1998
Chicago Settlement Hearing Tom Dowd Aug, 1998

Sears Retirees Take Issue to Web

Susan Chandler, Chicago Tribune Jul 11, 1998

 Sears Put Furniture Stores Chain Up for Sale

Susan Chandler, Chicago Tribune Jul 3, 1998

Lateral Move May Be a Step Down

Susan Chandler, Chicago Tribune Jun 23, 1998

The Softest Side of Sears
Discounters and High Fashion Rivals
Have It in a Squeeze

De’Ann Weimer
Business Week,  December 28, 1998

Sears, Roebuck and Co.’s CEO Arthur Martinez may be short on Christmas cheer this year. As rivals report robust sales growth, Sears numbers have dipped fall for four months. On Dec. 2, Sears warned that 1998 profits would be below forecasts, the second such warning in three months. Its shares have tumbled from a February high of nearly 64 to around 41 -- a drop of 35 percent. Is Sears turnaround stalled?

Not according to Martinez,the former Saks Fifth Avenue executive, who took over in 1995, has transformed Sears from a relic into a retailing powerhouse. He closed outlets, bagged the Sears catalog, and, with the "softer side of Sears" campaign, made Sears more like other department stores -- fewer tools and more apparel. The results ten months of double-digit sales growth.

Losing steam -- but Martinez hit a speed bump in 1997 when bad credit accounts ballooned, raising questions about the link between strong sales and easy credit. When Sears tightened credit, sales slowed.

Now the problem seems to be Sear’s Softer Side strategy, which is losing steam in the face of competition from both discounters and more fashionable stores. Sears "is back in that squeeze between the traditional department store and the discounter that offers better value," said Richard L. Church , a retail analyst at Salomon Smith Barney. "It's a hard place to be".

Martinez says the way out is to tilt toward discounters. Kohls, Target, and Wal-Mart have done a better job of improving product and are more credible on pricing," he says. The softer side focus on apparel "restored the credibility of Sears" for female customers, he says. Over five years, revenue from apparel rose from 4 billion to 9 billion. But now, Sears must "send a stronger value message to our customer," he adds.

That message, Martinez predicts will produce double-digit earnings growth by the end of 1999. But analysts are wary. Stephen Kernkraut of Bear Stearns Company warns "they are going to have to strike the right balance." Other stores have found that difficult. Montgomery Ward and Co, now trying to work its way out of bankruptcy, learned it couldn't beat discounters at their own game. So, too, did Venture Stores Inc. period, which went into bankruptcy in 1998. "Sears can't be everything to everybody," says Maxwell Sroge a retail consultant who works with Sears.

Sears isn't giving up its fashion ambitions. On Oct. 5, it announced a plan to sell merchandise from Bennetton Group, which has only sold through its own stores in the past.

Complicating Martinez’ plans is the loss of top talent from his turnaround team. On Dec. 4, John H. Costello creator of the softer side adds, left for Republic Industries Inc.'s Auto Nation USA-- the sixth key executive to depart this year. After two years of lackluster performance, Sears raises and bonuses are down. Concedes Martinez who got no 1997 bonus "they all left for significantly better situations than I could offer in the short-term."

When will the situation improve? There are some good signs. Old standbys such as craftsmen tools and Kenmore appliances are climbing. And Martinez is counting on services such as pest control, appliance repair, and carpet cleaning to improve Sears outlook. These new businesses however, don't yet contribute much to earnings which are now expected to come in at 1.27 billion. "They have been talking about home services for the last three years," says Kerncraut. "It would be great if it works but they haven't been able to do it yet."

Ever the optimist, Martinez is looking forward to 1999 and the payoff from his new value strategy. Investors can only hope it works.

(Surprise! The long term strategy is markdowns and pest control. Editor)  

This Christmas is Anything but Merry at Sears

Lisa Morrell
Crain's Chicago Business
December 21, 1998

Sears, Roebuck and Co. Chairman Arthur Martinez and his 5,600 Hoffman Estates headquarters employees are headed for a post-holiday hangover.

Sears is closing out the year amid weak fourth-quarter sales -- hit by a one-two punch of its own merchandising problems and unseasonably warm weather that's driving an industrywide sales slump.

In response, Sears will implement a revenue- boosting game plan -- adding products and brands and strengthening its private-label offerings in the new year. But while those plans take hold, Mr. Martinez will confront more immediate pressures to cut costs and tighten operations.

A prime target for cuts: Sears' Hoffman Estates headquarters, where the number of employees has ballooned 40% to 5,600 in the last six years.

The crunch comes after Sears announced that earnings will grow an anemic 1% to 3% this year -- well short of Wall Street expectations for a second straight year.

This time, instead of credit losses blamed earlier, the company cited weakness in its clothing sales -- a business that is at the heart of Mr. Martinez's now-stalled "Softer Side of Sears" comeback strategy.

Meanwhile, Sears' star has fallen on Wall Street. Its stock is trading in the $41.50 range, down about 35% from a 52-week high in June -- and not much higher than when Mr. Martinez succeeded Edward Brennan as CEO in 1995.

"There's got to be concern there by executives on what's going to happen," says Arthur L. Steinberg, president and CEO of retail and consumer products consulting firm Greenhouse Inc. in Chicago. "If you have two years running where you've missed expectations, you can't afford a third year."

And though Mr. Martinez declined to be interviewed, Sears responded to written questions about its declining performance.

"We continue to pursue the right strategic paths," the response notes. "We need, however, to clarify and communicate better Sears' value proposition in its apparel business. It is not well-understood by the consumer."

Compounding Sears' problems is a recent exodus of top managers. Five of Mr. Martinez's dozen lieutenants have left Sears in the past year, including his top marketing guru, top administrative officer and chief financial officer. (Most of those positions have since been filled.)

The departures have only complicated a rough retail environment. Analysts blame a stale apparel mix for a large part of Sears' fourth-quarter problems. November brought the fourth consecutive month of same-store sales declines -- down 3.6%, instead of the 2% increase Sears had forecast.

Part of Sears' problem is that the engines that drove an initial turnaround -- conversion of in-store storage space to selling space and the addition of new credit card accounts -- have run their course.

"Those easy, low-hanging-fruit-type of gains are over and now they have to take their business to the next level," says Todd Slater, retail analyst with Lazard Frères & Co. in New York.

Sears has added more than 9 million square feet of retail space since 1993, to bring its total to nearly 72 million square feet. But a key strategy to expand its franchise with free-standing "off-the-mall" specialty stores in areas such as auto supplies and furniture was unsuccessful, and the stores were sold.

Its remaining NTB National Tire & Battery and Sears Hardware stores face stiff competition.

On the credit side, growth also has slowed. Between 1993 and 1996, Sears signed up 24 million new credit card holders, which boosted sales. But after credit chargeoffs skyrocketed, Sears cut its new card offerings to 4 million new accounts a year for this year and next.

In addition, the company took a $320-million after-tax charge last year to cover legal expenses associated with illegal debt collection practices among consumers in bankruptcy proceedings.

Sears' answer appears to be a focus on its core businesses, more than 840 full-line department stores. But it needs a fresh approach for its merchandise and advertising.

"They have stuck with what worked too long," says Prudential Securities analyst Wayne Hood in New York.

To boost performance, Mr. Hood expects Sears to add lines such as plastic storage products in January and new china, glass and flatware by midyear.

He also expects Sears to remodel 10 fewer stores than planned -- a total of 40 next year -- and use the extra money for improving retail brands. Sears is adding a mid-priced Benetton clothing line and Vanity Fair lingerie on the apparel side and Krups appliances to its hard-goods departments.

Sears also is expected to make additional investments and boost promotions around private-label brands, such as Canyon River Blues and Fieldmaster apparel.

Results, however, will not come overnight. And if Mr. Martinez hopes to boost profits -- and Sears' stock price -- cuts may be inevitable.

Already, analysts are increasing estimates for overhead and expenses as a percentage of sales for 1999. And that takes a bite out of profits, further straining Sears' performance.

That may be a harbinger of bad news for workers at the Hoffman Estates headquarters, where Sears relocated from the Sears Tower in the fall of 1992.

Since then, the employee roster has grown significantly as Sears added staff for new functions and businesses, including a product development department and its tire business, and relocated functions such as logistics services, a spokeswoman says. In the last year, Sears opened a five-story addition to its headquarters to reduce office overcrowding.

On its current sales track, Sears' expenses appear to be under control. For the year's first nine months, its domestic selling, general and administrative expenses came in at 20.5% of sales, a decrease of 10 basis points from the year-earlier period.

Says Prudential Securities' Mr. Hood: "If it becomes difficult for them to drive revenues, then I think they will look for ways to tighten down."

(C)1998 by Crain Communications Inc        

The Enthusiasm, the Action, and the Flavor of the NARSE.

These two articles were inspired by the demonstration outside of the Oak Brook store on Wednesday, Dec. 9. Three different crowd estimates were used by reporters and Sears spokesperson, Paula “You are Burdens” Davis. For your accurate information, the wife of a Sears retiree took the time to count 115 noisy participants. We thank George Ohare and NARSE and 115 members of our retiree family who thought that the return of life insurance to their families was worth their time and effort......in mid December when demands on their time and attention are at a yearly high!

Sears Retirees Protest Cut in Benefits

Daily Herald, December 10 1998

Retirees above Sears ,Roebuck and Co. estimated that more than 200 people showed up at some point Wednesday at the Sears store at Oak Brook center to protest the retailer’s cut in their life insurance benefits.

The retirees have been engaged in a year-long struggle to overturn the decision and are pledging to picket stores across the country during the Christmas shopping season.

The National Association of Retired Sears Employees now claims 50,000 members in 250 cities. Its efforts are not restricted to protests, however, as a class action suit is pending.

A Sears spokesman said the number of protesters was closer to 75 and reiterated that Sears has no plans to restore life insurance benefits to their original levels.

Angry Retirees Protest for Life Insurance Benefits

Matt Tennicott
The Doings, December 11, 1998

An organization of retired Sears employees picketed the Oak Brook center store Wednesday, demanding the reinstatement of their term life insurance benefits.

The group hopes to "to get back what Sears has promised us -- all our promised and earned life insurance benefits," protest organizer and Willowbrook resident George O'Hare said.

About 80 retirees gathered at the north entrance of Sears, many wearing T-shirts bearing the words "Sears unfair to retirees," carrying protest signs and shouting slogans like "shame on Sears" and "we won't go away."

Sears Chief Executive Officer Arthur Martinez made the decision last year to end all life insurance benefits for post -- 1978 retirees. Upset over Martinez's decision, many retirees got together after his announcement to form the National Association of Retired Sears Employees to represent former and even some current Sears employees nationwide

O'Hare worked 34 years for Sears and retired in 1984. He saw things were changing when Sears began charging him for yearly life insurance.

"I started paying $300 a year, then $600, and then up to $1300," O'Hare said. "I saw it coming."

Wednesday's protest came a year after N.A.R.S.E. first called attention to the issue with a rally at the same Oak Brook center store. The group went on to sponsor protests throughout the country, and has filed a class-action lawsuit against Sears in the federal court system, O'Hare said.

Sears retirees won't back down, former Sears Vice President Claude Ireson said.

"We are not going to go away until Martinez changes his mind or until the courts change his mind for him," Ireson said.

Increased competitiveness in the retail market lead to a number of tough decisions, including the life insurance change, Sears spokesman Paula Davis said.

"We still view (the retirees) as part of our organization, and we understand their disappointment," Davis said. "However retirees were not the only ones affected. We also had to let current associates know that they will not have retiree life insurance."

"The retail landscape has changed dramatically in the last five years, so it has been critical for Sears to make changes in order to stay competitive," Davis said. "Retiree benefits were very expensive for us, representing a $2.7 billion liability."

Sears also maintains that the company gradually reduced benefits to $5,000 over 10 years " to give retirees at chance to plan on their own," and also offered company subsidized life insurance without a physical exam, benefits that are "very generous compared to other retailers," Davis said.

The benefit change has taken its toll on many retirees finances.

Woodbridge resident Paul and Judith Hrgham both were laid off from the catalog plant, Paul after 30 years and Judith after five. Since they lost their company paid benefits, they haven't been able to replace them.

“What affects us is paying for the premiums ourselves," Paul Hrgham said. "A lot of folks, when they retired, let their own life insurance pass because they knew the company would be behind them. Now, for many of us, who can only get part-time jobs if any, the wages aren't enough to pay for the premiums.

"We have three sons that we can't paid to send to college," Judith Hrgham added. "They have to take out more and more student loans."

However loud the protest was, though, feelings of loyalty still ran strong, which was evident by the number of protesters walking around the store after the protest.

"We still love Sears," Ohare said. "We just want to bring back the pride and loyalty Sears used to have."   

Must Not Be Employed to Win

Steven Strahler
Crain's Chicago Business
December 7, 1998

The delay in publishing Sears, Roebuck and Co. Chairman and CEO Arthur >Martinez's turnaround tale has given an opening to the not-so-admiring  National Association of Retired Sears Employees. The group, which has protested cutbacks in benefits, is asking members for proposed chapter titles. (Entries: Box 874, Oak Park Ill. 60303-0874. First prize: a T-shirt with an anti-Sears slogan). Hoffman Estate based Sears has blamed time demands on Mr. Martinez postponing "The Hard Road to the Softer Side: Lessons from the Transformation of Sears." Critics say its premise has been negated by Sears' renewed challenges, characterized by disappointing sales and missed profit forecasts. 

Executive Exodus Grows at Sears

Susan Chandler
Chicago Tribune, December 4, 1998

The executive exodus from Sears, Roebuck and Co.'s Hoffman Estates headquarters is turning into a stampede. John H. Costello, the architect of Sears' award-winning "Softer Side" advertising campaign, has decamped from the retail giant to become president of Wayne Huizenga's auto-retailing empire, Republic Industries Inc. Costello, Sears' senior executive vice of marketing, is the sixth executive officer of Sears to leave in the past year. Only two weeks ago, Sears chief information officer, Joseph Smialowski, left to join BankBoston. And in August, Sears Chief Financial Officer Gary Crittenden signed on with Monsanto Co. The departures come as Sears is winding up its second consecutive disappointing financial year, which will translate into slim or no bonuses for top corporate executives such as Costello. Costello, 52, was recruited to Sears by Chief Executive Officer Arthur Martinez in 1993 shortly after Martinez's arrival at the then-troubled retailer. Costello's experience with consumer products companies such as Procter and Gamble Co. and Pepsi-Cola USA came in handy as he and Martinez identified women as Sears core customers and developed an advertising theme--"Come See the Softer Side of Sears"--to win them back. But Costello did more than that, repositioning the Sears brand in the eyes of consumers through sponsoring concerts with stars such as Phil Collins and Gloria Estefan, said Neil Stern, partner with McMillan/Doolittle, a Chicago-based retail consulting firm. Costello also worked to bring younger consumers to Sears through sponsorships and awards for college sports teams, especially women's sports. And he made sure Sears was a founding sponsor of the Women's National Basketball Association. "Sears has made tremendous strides as a marketer while he was there," Stern said. "This is a big loss for Sears," said Kurt Barnard, a retail consultant and president of Barnard's Retail Trend Report in Upper Montclair, N.J. "Women before wouldn't even go to Sears, especially for clothes. But he showed them it was a great place to shop." He will be replaced by Mark Cohen, who joined Sears as a senior merchant in January after serving three years as chairman and chief executive officer of Bradlees, the struggling discount chain. Sears' stock gain 56 cents a share Friday to $42.81.  

narse Loses a "True Friend"

IT SADDENS the narse board to report that Joe Kehoe, one of the "founding directors" of our organization has passed away after a brief illness. Joe, a retired Sears corporate attorney, will be deeply missed by all of us, as we pursue our objective of the restoration of our retiree benefits.

For those of us, who did not know Joe personally, he can be best remembered as the individual who personally challenged Mike Levin, then Chief Counsel for Sears, at the Shareholders' meeting this past May.

On the lighter side he told Ev Buckardt in the hospital the evening before he died, "I would tell you what I think of Arthur Martinez but I promised St. Anthony I would not swear". Joe, God bless him, kept his humor to the end.

Joe, keep your eye on us and guide us in the fight!  

IRS - Good News!

The National Association of Retired Sears Employees has received from the I.R.S. a letter granting exemption from federal income tax under section 501(c) of the Internal Revenue Code.

To N.A.R.S.E., tax exempt status will significantly lessen certain expenses such as mailings to retirees. To narse members, it means that membership dues are now tax deductible.

Unfortunately, donations are not deductible.

Score one for the good guys!  

Sears Disappoints at Start of Holiday Season

Susan Chandler
Chicago Tribune, December 2, 1998

In an ominous start to the Christmas selling season, Sears Roebuck and Co. reported disappointing November sales Wednesday as women's apparel sales continued to weaken. Sears, the nation's second-largest retailer, said sales at stores open at least a year declined 3.6 percent in November, the fourth straight monthly decline for the department store chain. Sears' total domestic store revenue, which includes sales at its specialty chains, also fell, ending down 4.5 percent to $2.61 billion from $2.73 billion last year. The Hoffman Estates-based retailer released its November numbers a day early because Chief Executive Arthur Martinez was addressing a Lehman Brothers analyst conference in Florida Wednesday and was referring to sales results. The decline in sales led Martinez to lower year-over-year profit expectations for the second time since October. The retailer now expects earnings this year to be less than 3 percent over earnings per share of $3.27 a year ago. Wall Street had been expecting earnings to rise slightly more than 5 percent, to $3.44 a share, according to a survey of analysts by First Call Corp. Sears' stock fell $1.56 a share Wednesday to $43. Most of the nation's other retailers will release their November sales results Thursday. Discounters such as Wal-Mart Stores Inc. and Target are expected to make strong showings as are specialty chains such as Gap Inc. and AnnTaylor Stores Corp. But the nation's department stores, traditionally strong performers during the holiday season, are expected to post weak results across the board. "It's clear that since the department stores and national brands haven't come up with anything new, consumers are going to specialty stores for differentiation," said Thomas Tashjian, retail analyst with NationsBanc/Montgomery Securities in San Francisco. Many department store chains are playing it safe this holiday season, keeping inventories in check so they don't have to take big markdowns in late December. Marshall Field's, for example, says it would be satisfied if December sales increase only a few percentage points.  

Stuff You Need to Know

Nov 17, 1998

N.A.R.S.E. (Mel Schultz) has developed a "wanted" poster for bulletin board distribution at food stores and any location offering bulletin board space to the public (also mentioned in communications update). The "wanted" poster seeks the names and addresses of Sears retirees. Our membership roster grows like a weed thanks to efforts like this and those of the hundreds of Sears retirees who have taken the time to research personal phone books, Christmas card lists, and other sources to provide N.A.R.S.E. with the names and addresses of members of our retiree family. You'll be pleased to know how badly those contacted want to be part of our battle. Club Presidents will receive a master "wanted" poster for local copying and distribution within a week or two.

"Let's Add Insult to Injury"

Sears will not provide N.A.R.S.E. with a list of retirees. Apparently, Sears is only too happy to provide that list to Allstate Insurance company. Sears retirees have recently received a solicitation to buy...surprise...term life insurance for seniors from Allstate. Sears executive Tim Devereux the "General Manager - Insurance" (Not his actual title) signs the solicitation. The solicitation is pure arrogance . In the midst of the rebellion of 84,000 retirees on the subject of life insurance, Sears launches a profit producing scheme to sell them term life insurance. The lead-in line is stomach turning..."now you can guarantee more security for your loved ones". We must look stupid. Wouldn't you love to be a fly on the wall in the meetings that produced this attempt to profitably defuse the retiree life insurance conflict? Or maybe they just forgot we were unhappy; they may be arrogant enough to do that........let's not let them forget. 

Sears Creates New Post to Boost Sales

Chicago Tribune, Oct 27, 1998

In an effort to bolster the sagging performance of its department store, Sears, Roebuck and Company has named James R. Clifford President and Chief Operating Officer of Sears full-line stores.

Clifford's position is a new one for the Hoffman Estates based retailer. His responsibilities will include finance, human resources, strategy, store planning, construction and merchandise planning for Sears 840 full-line stores. He will share responsibility for managing the stores with president Robert Mettler, who is in charge of all merchandising and marketing, and President Allan Stewart, who heads Sears seven domestic regions and Puerto Rico. All three presidents are equal in standing and report directly to chief executive Arthur Martinez, a Sears spokesman said.

Martinez told Wall Street analysts last week that Sears was being hurt by weak apparel sales and a migration of customers to discounters such as Wal-Mart, target, and Kmart.

Clifford, 53, formally was President and Chief Operating Officer of Sears, Canada.

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NARSE California VP Ron Schurter wrote to the Board of Directors after reading the Martinez comments above. His analysis of Arthur's latest doublespeak follows:

Dear Sears Board Member ( by name),

Readers of the Oct. 27 Chicago Tribune, stockholders, and investors share in the confusion generated by Arthur Martinez' words:

"Martinez told Wall Street analysts last week that Sears was being hurt by weak apparel sales and a migration of customers to discounters such as Wal-Mart,Target, and Kmart.”

What is the Martinez message? Is it that the “softer side of Sears” campaign doesn't work? Is it that the sales lift guaranteed by almost six years of a flood of new and poor quality credit accounts has come to an end? Is it that Sears can not compete in price, quality, and fashion sense with discounters? Is it that the Martinez strategy is not the equal of the strategy of the "marts"?

The more important question may be the one that asks if we can believe anything from the mouth of a CEO whose consistent M.O. is to take personal credit for all good results and to blame others when times are tough. After all, his "flawed legal advice" comment explained away a half billion dollars worth of the credit debacle. His "flawed consultant input" comment explained away the dismantling of the once, intensely profitable automotive business and another huge write-off. His rationale for that disaster (from the Interim Report to Shareholders) was ludicrous:

“Creative solutions such as this will help us stay nimble and competitive in the ever changing world of retailing.”

“After repositioning Western Auto as a parts-only format, we explored ways to continue its growth without diverting capital from Sears core businesses. By retaining a 40 percent equity position in the new company, Sears will participate in the upside potential of this marger and create more value for our shareholders.”

Don’t look for a pony under this pile of corporate doublespeak. Arthur forgot to say that Western Auto and Sears automotive were core businesses until he destroyed them with bad decisions such as the parts -only format for Western Auto. He forgot to mention that Western Auto was sold at fire sale pricing to the detriment of shareholders. How can any CEO write-off a business that important with impunity? Be assured that the sale of Home Life at a huge loss to shareholders will be blamed on some fault or flaw in some location other then the corner office at Hoffman Estates.

Insiders contend that the Martinez revolving door of key executives will soon spit out one or two more presidents; the field Financial V.P. just left for the Gap; Chief Financial Officer Crittendon and General Counsel Levin have not been replaced; a new President whose best credential is being a Martinez crony is named, and the Martinez rationale for his placement is to improve sales. Do you expect anyone to believe that a 51 year old whose entire resume is finance/operations will do much to improve sales? Belief in the tooth fairy would come easier. Credibility was once very important at Sears, Roebuck and Co.

As a Director, it is your privilege to require a review of the company strategies and economic model. Merchandising is profit proof; "off the mall" isn't working; credit and income from the back of the P&L statement (service, etc.) represent the overwhelming share of company profits. With the exception of these cash cows, Sears is running out of assets that can be sold. Under the leadership of a CEO who would sell the future of the company as easily as he sold its past, they may be next.

This letter respectfully requests your high-level review of the strategies and decisions driving the future of Sears. As a retiree whose family is the victim of one of those decisions, your review will , in my opinion , conclude that the "flaw" lies in the CEO .....to the degree that you will have to reverse his worst decisions and rewrite the final chapter in his self serving book.

Very truly yours, 

The Packman Family 
The True Meaning of the Word
"Sears Family"

In all of my time at Sears I don't believe I have ever come across a better meaning of Sears Family than the story I am about to unfold for you. While searching the E-mail club on our website I came across an unbelievable story about "FORMER LOYALTY AND DEDICATION TO A ONCE GREAT COMPANY"

· The year 1935 Ben Packman starts as a secretary at the L A Boyle Store · In 1938 he transferred to L A Pool stock where he met Ann Hurwitz. They were later married and Ann was forced to quit, During the 50's Ben was transferred to Mid-Cal and worked in San Leandro Pool Stock. He retired in 1972 having been a Hardlines Merchandise Manager for several years. · August 6, 1963 twins Ben and Brent start to work for Sears, Bruce in sales at the Army and Mission store in San Francisco and Brent at San Leandro Central Service. Bruce retires in 1996 after serving as D/9-30-87 manager and finished his career in sales in D-42 in the Santa Cruz CA Store. Brent retired in 1985 from San Leandro pool Stock. Bruce's ex-wife. Sandra, worked for Allstate for 14 years. Sandra's sister Judy worked for Allstate in Menlo Park for several years.


Would this happen today? Not no, but "HELL NO" !  

Inside Retailing

Susan Chandler
Chicago Tribune, Nov 21, 1998

Shoppers speak: Just in time for the holiday shopping season. Consumer Reports magazine says it has the lowdown on the best places to shop.

And its ranking of retailers, based on a survey of its readers, might surprise you.

Among department store retailers, Seattle-based Nordstrom ranked first with high scores across the board for service, quality, and value. No surprise there.

But farther down the list, Saks Inc.’s, Carson, Pirie Scott, and Co. edged out Dayton Hudson's Marshall fields. Carson's racked up a higher score for value even though fields came out ahead in the service category.

JC Penney Co. placed several notches ahead of Sears, Roebuck and Co., again because its value ranking was better. Close behind Sears was Montgomery Ward and Co., which is trying to get shoppers to "take another look."   

Home Life Sold to Citicorp

Susan Chandler
Chicago Tribune, Nov 20, 1998

Only a few years ago, Sears, Roebuck and Co. touted its Home Life furniture store chain as one of the retailer's hottest growth vehicles. On Thursday, Home Life became one of Sears "non-core assets," and another major embarrassment for Sears chief executive Arthur Martinez.

The Hoffman Estates based retailer announced it was selling the troubled 126 store chain to Citicorp Venture Capital, the venture capital arm of New York-based City Group Inc., for 100 million in cash plus some debt and lease obligations. The Home Life sale which is expected to close by year end, will trim Sears earnings, with a onetime charge of more than 390 million, or 5 cents a share, on an after-tax basis.

Sears said it will retain a 19 percent equity interest in the new company which will continue to be called Home Life. The units 2,000 employees around the country will keep their jobs, and Home Life's headquarters will remain in the Chicago area. The chain also will continue to accept the Sears credit card which will help the company's lucrative credit card business which generates about half of Sears’ profits. “This transaction represents another step by Sears to redeploy non-core assets and focus on growing our core businesses”, Martinez said.

It's the second time this year that Sears has sold a money losing subsidiary that once was promoted as a major part of the company's growth strategy. In August, Sears sold its Western Auto Supply Co., to an auto parts chain in Roanoke, Virginia, and recorded a third quarter after-tax loss of 225 million. Dumping Home Life also is an admission that Martinez needs to refocus his attention on Sears department stores, which have turned in lackluster performances over the past several months.

Expanding the furniture business once seemed like a natural for Sears. Creating a freestanding home life stores opened up space for higher margin apparel in Sears. And expanding its furniture offerings capitalized on a major retail trend of the '90s. Competitors were shifting their emphasis towards home related items. Still, Sears failed to sufficiently differentiate Home Life’s moderate price offerings from those of competitors such as Montgomery Ward and Co. and Levitz furniture Corp. which regularly put goods on sale, industry experts say. And in the early days of the expansion push, much of Home Life furniture arrived at customers’ homes in damaged condition which led to high rates of return and disappointing profit margins.

Another strategic error, Sears spread Home Life stores thinly across the country, failing to concentrate them in important markets where the advertising would have the most impact. The company admitted that mistake in 1997 when it closed 28 stores and retrenched in a handful of core markets including Chicago, San Francisco, Seattle, and Boston. Last year, Home Life stores racked up only 650 million in sales down from 657 million in 1997, according to Furniture Today, an industry trade publication. Back in the late 1990s, before it began moving Home Life out of Sears stores, Sears sold one billion in furniture annually.

Citicorp Venture Capital is getting Home Life at a bargain basement price and should be able to use the chain to distribute high-profile furniture brands it already owns industry players say. The venture group is the parent of Bannockburn-based Futorian Furnishings, which owns several major upholstery companies, including Barcalounger, Stratford, and Simmons. Citicorp Venture Capital also has a stake in Lifestyle Furnishings International of High Point, North Carolina, which controls a stable of major brands including Henredon, Drexel, Heritage, Bench Craft, and Berkline.

At one time, the group owned a chunk of Levitz, then that the nation's largest furniture retailer. In 1997, Levitz, based in Boca Raton FL, filed for bankruptcy protection. "Home Life is a very attractive and complementary investment," said M. Saleem Muqaddam, a partner with Citicorp Venture Capital.

Observation:   Arthur, following his 590 million dollar “after-tax” giveaway of Western Auto and Home Life businesses, stated he wants to concentrate on his core business. What is the “core” business? Will Arthur define it? He has yet to do so. Editor

Lawsuit Update: Legal Rumbling

Susan Chandler
Chicago Tribune, Oct 17, 1998

The lawsuit filed by Sears, Roebuck and Co. retirees over the retroactive cutback in their life insurance benefits is languishing in federal court. U. S. District Court Judge James Moran still has not ruled on whether the suit should be given class-action status, something the retirees are seeking and Sears opposes. Charles Watkins, one of the lead attorneys representing the retirees says he would be happy if the judge ruled before the end of the year, but is not sure that will happen. Recent legal rulings on corporations' rights to cut retiree benefits have not bolstered the retirees' hopes. But new documents filed by their attorneys are no doubt creating a stir in Hoffman Estates, where Sears is headquartered. A dozen former executives, including some high-ranking ones, have filed affidavits saying they routinely told employees that life insurance benefits were vested for life. In his affidavit, Joseph Reddington, a 27-year Sears veteran and former chief administrative officer for Sears Merchandise Group, said, "I clearly understood retiree life insurance to be a paid-up, permanent benefit." Laurence Cudmore, former president of Sears retail operations, who took early retirement in 1992, said, "Throughout my career at Sears . . . I understood the Sears retiree life insurance policy to be a paid-up policy." Thomas B. Dowd, former Sears national manager of human resources, field operations, said he not only believed the insurance was "paid up," he "personally characterized" it that way during exit interviews with numerous Sears employees who were retiring or being let go.

Tire Balancing Lawsuit

Chicago Tribune.
September, 1998

”Sears Roebuck and Co. may face a lawsuit from millions of consumers who say the Hoffman Estates based retailer charged extra for special tire balancing services that were never provided. The Atlanta U.S. Circuit Court of Appeals reversed a federal judges decision and reinstated a Florida man’s lawsuit over the AccuBalance service the case now goes back to a court in Florida to determine whether it should be turned into a class-action suit with potentially millions of plaintiffs.”  

A Visit to the “House of Deception”

Wednesday morning, September 30, from 630 to 740 a.m., Chicago Sears retirees greeted Sears Hoffman Estates associates and Arthur Martinez as they arrived at work at the Hoffman office complex. Under the leadership of Leo McCormack, the "betrayal of trust" message was well communicated to many hundreds of current Sears associates. A casket and 7 tombstones with messages such as "Sears national headquarters is the house of deception; RIP Sears trust; RIP Sears principles; RIP Sears family values, and RIP Sears integrity.” The message to King Arthur was clear. We will not go away, and maybe it's time that current Sears associates knew more about us and the future of promises made to them.

We don't know how many hundreds of cars and associates passed our Hoffman Estates demonstrators and slowed down to read our signs and enjoy our casket and its message. We do know that 20 to 30 cars passed every time the light changed over in the 80 minute demonstration time frame.

We also know that one of the signs asked the individuals driving by to honk if they supported us. We sincerely wish that Arthur could have seen and heard the consistent honking, the thumbs up, and the words and signs of encouragement from Sears associates. To give you a flavor of the support level, one person out of the many hundreds who passed made an obscene gesture. Adding the "dirty digit" person to the few who passed quietly, a conservative estimate says that 30 people showed support for every car with no response.

Think about that King Arthur!
Could it be that current associates also worry about takeaways and
the lifespan of their promises?

A Very Necessary Correction!

The following piece omitted the name of Rafe Viton as a panel participant. Rafe, our N.A.R.S.E. Vice President from the Southeast travelled from Florida at personal expense and contributed much to the panel effort. He does not deserve to be omitted.....besides, his wife, Barbara, wanted to know where her husband went for 2 days! Editor

NARSE on Chicago Cable TV

Chicago Access Network TV

George Ohare arranged for and hosted a one hour panel discussion titled "battle for benefits" on Chicago Access Network TV. The panel was comprised of Elaine Leonard, Bill Barker, Chuck Harrison, Ev Buckardt, Cliff Hooks, Tony Debevetz, and Tom Dowd. Mel Schultz provided the written outline used by George to prompt the discussion of a large number of subjects in an orderly way. As you would expect, the subjects included Sears background, benefit history, the role of management in communicating benefit information, the arrival of King Arthur, the erosion of trust, the impact on human beings, the formation of N.A.R.S.E., the legal battle, and other subjects.

Why do this? Cable companies are required to give local communities free access channels for community subjects such as ours. N.A.R.S.E. will send each retiree club president two videotapes. The first video will be the full one hour panel discussion that clubs are asked to arrange to be shown on local FREE cable access channels. The second video will be a shorter, edited version suitable for showing at a retiree organization or club meeting. We hope that both are useful in enhancing the growth and effectiveness of Sears retiree clubs and in finding new members for "Arthur given back" efforts.

(October 4, 1998)

Plaintiffs filed a motion for class certification so that they could represent all Sears employees who have had their retiree life insurance reduced by Sears benefit cutback. That motion is still pending while discovery and briefing concerning it are completed. Sears filed a response to that after its attorneys took depositions of approximately 15 named plaintiffs.

On September 11, 1998, plaintiffs filed an additional memorandum in further support of their motion for class certification. In that memorandum, plaintiffs argued that Sears breached its fiduciary duty (its duty of candor and fair dealing) by systematically and uniformly communicating to Sears employees that they would receive "paid-up", free life insurance upon retirement if they paid into the plan for ten consecutive years prior to retirement despite the fact that Sears knew it could terminate or change that benefit at any time. In support of this claim, plaintiffs submitted the affidavits of a dozen former high level Sears executives, including two former national vice presidents of human resources, a former president of sears retail operations in the United States and a former national manager of benefits. Some of these individuals, like Charlie Bacon, Con Massie, Joseph Reddington, Larry Cudmore and Tom Dowd are no doubt familiar to you.

In that memorandum, plaintiffs also argued that the Court should certify a class on their claims for enforcement of the plan terms and for breach of contract.

Sears has until October 9, 1998 to respond to plaintiffs' arguments. The Court will then review the parties submissions and issue a ruling on plaintiffs' motion for class certification. Unfortunately, there is no way of knowing how long it will take Judge Moran to rule of the issue of class certification, but when the Court issues its ruling we will report on it here. In the meantime, discovery in the case is on-going.

Unsung Heroes

Thomas Dowd
September 11, 1998

General Schwartskopf said it best when he said "the heroes are the people who go into battle. They are the ones with courage. They are the true champions." Among the 84,000 Sears retiree's who were so badly wronged by Arthur Martinez, there are people who express their concern, their love for each other, and their determination to recover what is theirs by their actions. The following are but two examples of committed and dedicated groups of people who let their actions speak for them:

Fresno California retirees are coordinated by Lanella Hare. Most protesters are former service associates. On a regular basis through May, they protested against Sears actions in front of their Sears unit until the California summer got intolerably hot. They are now planning strategies for the fall, and their track record says clearly that they will do so much more.

Nat Corallo of San Jose reports that, on a consistent basis, each of the Sears Orchard Supply stores have been visited by retiree protesters led by Kathy Davis of Santa Clara and Paul Gandenberger. All 10 Sears San Francisco Bay area stores have been visited by protesters at least once. In support of CEO Martinez’ visit to Torrance, The Cupertino store had retiree protesters in front of it. All they want is their promised retiree life insurance back, and, with people like this, we can say with confidence we will recover what is rightfully ours.

They make us proud, and we thank them because they are indeed heroes. 

Sears Sees $250 Mil Loss in Sale of Western Auto

Investors Business Daily
August 19, 1998

Advance Auto Parts is buying Sears Roebuck's Western Auto Unit for $175 million cash. Sears will also get 20% stake in the new company. The loss will be recorded during the third quarter. The deal will create automotive parts supplier with 1,500 stores in 36 states and 2.1 billion in sales, Advance Auto said. Roanoke, VA based Advance has 915 car parts stores in 17 states.

A Warm California Welcome for the King

Tom Dowd, Torrance Sears Store,
August 13, 1998

Under the leadership of Ron Schurter, 35 plus retirees in their "fashionable yellow T-shirts" proudly expressed their disappointment in Sears and King Arthur. The retirees were at all doors around the store, and they followed Arthur Martinez as he walked the press and others around the inside of the Torrance store. They moved from door to door following Arthur and the entourage Sears was exposing to new retail initiatives. The L.A. retirees added their considerable chanting abilities ("WE ARE HERE TO STAY",etc.) to bring diversity to the in-store happenings. There were six "guys in suits" monitoring but not interfering with retiree activities...without doubt, Sears security types. Demonstrators carried professionally printed signs that said Sears is unfair to retirees.

When the store opened, the retirees walked through the store and took the elevator to Preston Clark's office. Preston is the store general manager of the Torrance store. They introduced themselves to the person outside the store managers office as friends of Preston there to congratulate him on the appearance of his store. In the presence of an L.A. Times reporter, Preston came out, greeted them, and said that Mr. Martinez would talk to them. Arthur did come out, shook hands, and answered several questions on loyalty, the case of a current associate on unpaid leave after angioplasty, and the cost of replacement life insurance (Allstate quoted to Ron Schurter a rate that was 1/3rd of the Metropolitan rate).

Arthur gave his usual rationale and resolve for the retiree insurance decision and, to briefly summarize his responses, said the world is different (loyalty question); will have that looked into (employee case); we checked competition (on insurance cost question). He assured the retirees that there are no plans to further reduce benefits and, as he said at the annual meeting made the insurance decision rather than a more damaging decision on health insurance. Now, don’t you feel better?

Our L.A. retirees planned, traveled distances, demonstrated in 100 degree heat, told our story to the press and public, and confronted the source of our discontent... Arthur Martinez. Those retirees are thanked, commended, and saluted for representing our cause so well. They made a difference.

Virginia Beach Club

Thomas Dowd
September 11, 1998

Club President Pat Gambardell and Jim Fletcher hosted the recent meeting of 90 retiree members of theTidewater Club in Virginia Beach. Tom Dowd was the guest speaker and offered the message that only frequent and widespread retiree actions will convince King Arthur and the Board of Directors that their cruel decision has to be reversed. The message was well received by people who have already shown that they can make a difference. Arthur will not get any rest from the Sears retirees in the Tidewater area! 

Advance Buys Sears' Western Auto

George Gunset,
Chicago Tribune,
August 18, 1998

Sears, Roebuck and Co. said it has sold its Western Auto subsidiary to Advance Auto Parts of Roanoke, Va. for $175 million and a 40 percent stake in the new company. The acquisition is expected to close by year end subject to regulatory approval. The Hoffman Estates-based retailer paid $250 million for Kansas City, Mo-based Western Auto in 1988. 

Sears CEO Loses Key Player

Susan Chandler and Sallie L. Gaines, Chicago Tribune,
August 13, 1998

The chief financial officer of Sears, Roebuck and Co. has been wooed away  by Monsanto Co., leaving another hole in the management team crafted Chief Executive Arthur Martinez.

Gary L. Crittenden will become the fourth  high-ranking Sears executive to depart in  the past nine months. Crittenden was "a   valued member" of Sears' executive  committee, a group of top officers that  advises Martinez, said Sears spokeswoman  Paula Davis.

With his experience in strategic consulting,  operating business units and number  crunching, Crittenden was considered by  many to be in the running to succeed  Martinez when he retires.

Crittenden will become chief financial officer  of St. Louis-based Monsanto, a giant in the  pharmaceuticals and agribusiness fields,   effective Sept. 1.

The timing of his move may seem puzzling  because Monsanto hopes to complete its  merger with American Home Products  Corp. by the end of the year. American  Home's chief financial officer, Robert G.  Blount, already has been named chief  financial officer of the as-yet-unnamed  combined company.

But several people knowledgeable about  the merger plans said Crittenden's  appointment actually meshes neatly with  longer-term succession planning, suggesting  that he will succeed Blount in short order.

At Sears, however, Crittenden's departure  is further evidence of what some are calling  a revolving door at the retailer's Hoffman   Estates headquarters.

Crittenden has only been Sears chief  financial officer since December, when his  predecessor, Alan Lacy, was moved over  to head the retailer's troubled credit card  unit. Crittenden previously had been  president of Sears' fast-growing hardware  store division and, before that, executive   vice president of strategic business planning.

Sears said Thursday that Lacy again will  assume chief financial officer duties, in  addition to his credit card job, until  someone is hired to permanently replace  Crittenden. "He (Lacy) knows the job well,"   Davis said.

In May, Michael D. Levin, head of Sears'  legal department, resigned unexpectedly to  return to private practice after only two   years at the retailer. Sears said Levin's  departure was not related to an expensive  scandal that erupted in 1997 when Sears  revealed it had been illegally collecting debts  from bankrupt Sears card holders for more  than a decade.

In March, Anthony Rucci resigned as Sears'  head of administration to take the top  human resources job at mutual fund leader   Fidelity Investments. Sears said the move  had nothing to do with an unpopular   decision under Rucci's regime to  retroactively reduce life insurance benefits   for 80,000 Sears retirees.

And last December, Steven D. Goldstein,  president of Sears' credit division, resigned  to start his own business. At the time,   Martinez vigorously denied Goldstein's  departure was connected with rising losses  from bad credit card debt.

"A revolving door at the executive level  does not augur well for the long-term  continuity of any business," said Everett   Buckardt, the former head of the Sears  Catalog and a critic of Martinez's   management style.

At first glance, American Home Products is  considered the dominant partner in the  merger with Monsanto, announced in June.  The combined company will be based in  Madison, N.J., the drug and   consumer-products company's home. The  chairman and chief executives of the two  companies--Monsanto's Robert B. Shapiro  and American Home's John R.   Stafford--will share the top job.

Other executive jobs and board seats also  have been doled out, including the chief  financial officer position to Blount.

But Blount and Stafford are in their early  60s, and the latter underwent surgery last  year for prostate surgery; both are expected  to retire after a transition of a year or two,  noted several people familiar with the deal.  That would leave Shapiro, who just turned  60, alone in the top job for several years.

Insiders say the hiring of Crittenden, 45, is  part of Shapiro's plans to craft his own  management team--and succession.

"He has told Crittenden that `You will  become the CFO in the merged companies  at the right time. If that doesn't happen, you   will be an operating guy, but you will clearly  have the opportunity to succeed me as  CEO,' " said one source familiar with the  deal.

An analyst who researches both companies  said Crittenden's hiring shouldn't be read as  an intent by Shapiro to grab power   immediately.

"It would be almost irresponsible of John  Stafford and Bob Blount to just walk away  immediately from the American Home   perspective. They have a fiduciary  responsibility to their shareholders," said  one analyst, who asked not to be named.  "Nothing surprises me anymore, but my  instinct is that they wouldn't leave   immediately--maybe in a year, two years."

Crittenden likely jumped at the Monsanto  job because "it's going to be a huge  opportunity," the analyst said. Another   analyst noted that it shows foresight for  Shapiro to have a younger candidate being  trained for the job.

On the other hand, several analysts and  insiders said that Shapiro is almost certain  to want to consolidate his power once he is   alone at the top. There has been speculation  that, once he is in control, Shapiro will  move the headquarters out of New Jersey.

While Monsanto is based in St. Louis, its  Searle subsidiary is in Skokie and its  Dekalb Genetics unit is in De Kalb. In   addition, Shapiro works primarily out of  offices in the Merchandise Mart. He lives  on Chicago's North Side and commutes  periodically to St. Louis--a much shorter  trip than to Madison, N.J.

Crittenden, who could not be reached for  comment, also will work from the Chicago  office, Monsanto said.

In the short term, Crittenden will act as chef   financial officer of Monsanto, succeeding  Robert B. Hoffman, who had declared his  intention to retire before the merger was  announced. Monsanto spokeswoman Lori  J. Fisher said the company decided to fill  the job, despite the impending merger,  because "we need to focus on a couple of  things driving some short-term business  results for Monsanto shareholders."

She said Crittenden also will have a role "in   helping plan and design the new company." 

ETC . . . Ex-Sears Exec to Head UIC Business School

Cranes Chicago business
Aug. 10, 1998

Anthony J. Rucci , 47, has been named dean of the College of Business Administration at the University of Illinois at Chicago. He takes over the post after serving for just three months as vice president of human resources for Fidelity investments in Boston. Previously, Mr. Rucci who will be paid $230,000 a year, held positions at Sears Roebuck and company. And Baxter international Inc.... 

The Revolving Door Goes Around . . . And Around

Boston Globe
Friday, July 24, 1998

Fidelity executive quits after three months on the job:

Fidelity investments Anthony Rucci, head of human resources, has resigned three months after joining the mutual fund company from Sears Roebuck and company. Rucci, 47, is leaving Boston-based Fidelity for “personal reasons”, the company said end will rejoin his family in the Chicago area. Thomas E. Lewis who headed the human resources department before Rucci was hired, will resume the role on an interim basis until a successor is named. Rucci reported to James Curvey, Fidelity's chief operating officer, and was part of the operating committee which oversees the day-to-day running of America's biggest mutual fund company. As head of the human resources department, Rucci was in charge of hiring, compensation, benefit plans, training programs, and employee relations issues. The company has more than 25,000 employees. (Bloomberg)  

Cries and Whispers

Marc Spiegler
Chicago Magazine
Aug. 1998, p. 15

“Looks as if “the Hard Road to the Softer Side”, Sears chairman Arthur Martinez’ book on reviving the huge retailer, won't be hitting the stores this fall as originally promised. Why the delay? Martinez lawyers are said to be wary of letting it out before the Justice Department concluded its investigation into Sears illegal debt collection from bankrupt clients”.

The three retirees who provided this magazine piece put tongue firmly in cheek and asked the following questions:

Is Arthur on an ego trip? Do you think he will share the book profits with the older Sears retirees from whom he took money? Didn't Chainsaw Al write a book just before the Board of Directors released him for poor performance? Wasn't it King Arthur who called prior management arrogant? If you're spending your time writing a book, is there any wonder that you have to act on “flawed advice”. 

Chicago Settlement Hearing

On August 10th, Judge Lindberg (7th Circuit Court Chicago) will conduct a hearing on the proposed settlement of the class action suit regarding the Sears credit reaffirmation procedures. This is another segment of the consent decree agreed to by the Company in which the N.Y. Supreme Court approved a settlement in the hundreds of millions. The Company has agreed to a settlement that will award an additional 11plus million on attorneys and shareholders. An insurance carrier will pay the bulk of the settlement. We will be represented at the hearing. 

Sears Retirees Take Issue to Web

Susan Chandler
Chicago Tribune
Staff Writer
Published: Saturday, July 11, 1998
Section: BUSINESS ; Page: 2

Retirees of Sears, Roebuck and Co. haven't had much to cheer about recently in their fight to have life insurance benefits restored. While their lawsuit in Chicago against the Hoffman Estates-based retailer awaits a judge's ruling on class-action status, several court actions, including one in a landmark case brought by General Motors Corp. retirees, have gone in favor of a corporation's right to retroactively reduce retiree benefits.

But instead of feeling sorry for themselves, Sears retirees are taking their complaints to cyberspace. A group known as the National Association of Retired Sears Employees has launched a Web site to keep its more than 10,000 members informed and to solicit new supporters.

The site, which started carrying content July 4, sets an edgy tone with an editorial cartoon that was purchased from Crain's Chicago Business.

The cartoon by Roger Schillerstrom depicts a Sears wrench as a product with a "lifetime warranty," a Sears dryer as one with a "limited warranty," and a company retiree as a Sears item with "no warranty."

A letter from association Chairman Claude Ireson is no less blunt. It calls on members to play "tit for tat," by sending Sears CEO Arthur Martinez receipts for Sears-type merchandise purchased at other stores.

Buzz Williams, a California retiree who got the Web site up and running with a lot of help from his brother-in-law, believes the electronic presence will help rally more of Sears 133,000 retirees to the cause.

He is particularly proud that the site already has had six hits from Sears headquarters in Hoffman Estates. "I hope they'll visit it. We want them to know that we do not plan to roll over and play dead."

That's a message Sears no doubt has heard loud and clear the old-fashioned way. 

 Sears Put Furniture Stores Chain Up for Sale


By Susan Chandler,
Chicago Tribune Staff Writer.

Published: Friday, July 3, 1998
Page: 1

Retreating from a major growth initiative, Sears, Roebuck and Co. has put its HomeLife chain of furniture stores up for sale.

Sears told the Tribune Thursday that it recently has hired investment bankers from Salomon Smith Barney to "explore options" for its 126 free-standing furniture stores around the country.

For at least two weeks, the bankers have been circulating prospectuses on HomeLife to prospective retail and financial buyers.

In addition to an outright sale, Sears' options with HomeLife could include selling a stake to a financial partner who is interested in funding the chain's expansion, said Sears spokesman Ron Culp.

Another option is partnering with a furniture manufacturer who is interested in investing in HomeLife as a way to expand distribution. The Hoffman Estates-based retailer also could decide to leave HomeLife alone, Culp said.

One strategy is clear: Sears doesn't want to invest any more of its capital in the underperforming furniture business.

Analysts won't be surprised to see HomeLife go.

"The HomeLife business hasn't taken off to the extent we'd hoped," said Rick Nelson, retail analyst with Stephens Inc. in Winnetka. "The potential is still enormous for somebody to pull this off."

Earlier this year, Sears chief executive Arthur Martinez told stock analysts he would consider selling off HomeLife if the business didn't turn around. But the chain has racked up double-digit same-store sales increases for five of the past seven months, leading many to believe the chain was rebounding.

Still, HomeLife has never been a stellar performer for Sears since the first freestanding store was opened in 1989. Sears sold about $1 billion in furniture annually back then, but as furniture was moved out of the stores, sales shrank drastically.

Last year, HomeLife stores racked up only $650 million in sales, down from $657 million in 1996, according to Furniture Today, an industry trade publication. That ranks HomeLife as the third-largest furniture retailer in the country behind No. 2 Levitz Furniture Corp., which is in Chapter 11 bankruptcy, and No. 1 Heilig Meyers Furniture Co.

HomeLife stumbled because its stores were too small and its offerings too concentrated at the moderate-priced end of the market where competition from Montgomery Ward & Co. and Levitz was fierce, industry players say.

The chain also suffered because HomeLife stores were scattered among many cities, making it hard to spread advertising dollars over a base of stores. Last year, Sears acknowledged that mistake, closing 28 HomeLife stores and retrenching to seven core markets, including Chicago, San Francisco, Seattle and Boston.

Sears is unlikely to reap a windfall even if a buyer for HomeLife emerges, because the chain is losing money, industry experts say.

An outright sale poses other complications, because 25 HomeLife stores still are located inside full-line Sears stores. Another downside of selling HomeLife would be the loss of credit-card revenue generated by big-ticket furniture purchases. 

Lateral Move May Be a Step Down

Susan Chandler
Chicago Tribune Staff Writer

Published: Saturday, June 27, 1998

Section: BUSINESS Page: 2

Jane J. Thompson, the highest-ranking woman at Sears, Roebuck and Co., is making a career move that has many Sears watchers puzzled.

This week, Sears announced Thompson was moving from president of its fast-growing Sears Home Services unit to head a new business group, Sears Direct.

In her new capacity, Thompson will be in charge of all of Sears' 17 catalogs and the retailer's electronic commerce activities, including its successful Web site for Craftsman tools. She will continue to report directly to Sears Chief Executive Arthur Martinez.

Although Sears declines to break out revenue numbers, there's no question that Sears Direct is a much smaller business unit than Thompson was heading. Fourteen of the 17 specialty catalogs mailed under the Sears banner are actually produced by other catalog companies. And a company spokeswoman said there are no plans to bring back Sears' famous Big Book, which Martinez closed down in 1993.

Thompson was selected for this new job because of her entrepreneurial abilities and strategic thinking, honed by a 10-year stint as a McKinsey & Co. consultant, Sears said.

Those were the same abilities that landed Thompson the prize position of heading Sears' Home Services unit two years ago. Her marching orders from Martinez were to triple the size of Sears' appliance repair and home improvement business to $10 billion in four years.

Thompson has made progress, but why is Sears pulling the plug on her two years early?

Sources close to Sears speculate the move is related to her previous stint as head of Sears' credit unit from 1993 to 1996. Her directive there was to ramp up Sears' sleepy credit card business. She did that, but many of the more than 11 million new accounts she added began to go sour in late 1996 and '97, torpedoing Sears' profit last year.

Thompson's role in Sears' credit card scandal was questioned by shareholders at the company's annual meeting in May, as was the role of Michael D. Levin, Sears legal counsel.

Martinez defended them both. Levin resigned unexpectedly to return to private practice a month ago, however.

That makes Thompson's lateral move sound like another shoe dropping.

Stay away: Marshall Field's to Mayor Daley: Bringing Macy's to Block 37 would be a really bad idea.

That's essentially the message Field's parent, Dayton Hudson Corp., has communicated to the city's Department of Planning and Development, said Linda Ahlers, president of Dayton Hudson's Department Store Division, which includes Marshall Field's.

She's referring to reports that Macy's, part of Federated Department Stores Inc. in Cincinnati, is asking the city for public money to put a store right across State Street from Field's.

"Macy's doesn't add to what's already there. We have two department stores on State Street," Ahlers said this week during a walk through Field's newly renovated store in Lake Forest. "It would be ineffective to use public funds to bring in another."

Instead, the city should carry through with Daley's vision of creating a block of specialty retailers, restaurants and entertainment outlets, Ahlers said.

Her view should carry some weight in City Hall. Marshall Field's kept State Street alive during its darkest days by spending $125 million renovating its State Street store.

Ralph redux: Polo Retail Corp. has found a successor for Maureen Basse, the well-liked general manager of Chicago's successful Polo Ralph Lauren store.

Patrick Sweeney is leaving his post as vice president of international stores at Calvin Klein Inc. to assume responsibility for merchandising and operations at the Polo store in Chicago.

Before his stint with the master of minimalism, Sweeney worked as general manager of Polo's Madison Avenue store from 1992 to 1996. 


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