HOFFMAN ESTATES, Ill. – Changes are on the way for Kmart and Sears stores following the merger of their parent companies, but widespread store closings won't be part of them for the moment.
Minutes after a rancorous shareholders' meeting where Sears, Roebuck and Co. (S) retirees denounced the 119-year-old retailer's sale to Kmart Holding Corp. (KMRT), Lampert stated his intent to reinvigorate the two faded retail icons and "transform them into a great company."
"I think either company on its own could have been OK," said Lampert, who was Kmart's chairman and the largest individual shareholder in each retailer. "But I don't think either company could have been ... a great company."
The new retailer pairs Sears' most successful products, including Craftsman tools, Kenmore appliances and DieHard batteries, with such Kmart brands as Martha Stewart (search), Jaclyn Smith and Joe Boxer. With a combined 3,800 stores in the United States and Canada, it will have almost unmatched visibility throughout North America among big retailers.
A specific blueprint for change hasn't been disclosed, other than the earlier-announced plan to convert up to 400 Kmart stores to the new mid-sized Sears Essential concept, which adds snacks and other convenience items to the usual mix of offerings.
But Lampert sought to dispel the notion among many on Wall Street that his strategy calls for a wholesale sell-off of the company's assets — including Lands' End (search), which he described as a "great American brand" that "isn't for sale."
"I think there's a presumption that you're going to see a lot of store closings. That's a wrong presumption," he said at a news conference in Sears' headquarters, which will house the combined firm. "There is no plan right now to say we're going to close these 10 stores or these 50 stores," he said. "As these leases come up, we'll make those decisions."
The deal closed shortly after the back-to-back shareholder meetings — Kmart's tame, Sears' fractious.
Support from Sears shareholders matched that of Kmart voters, 69 percent. But CEO Alan Lacy, the new company's' chief executive and vice chairman, was subjected to shouting and insults by a noisy minority of the 200 in attendance.
George O'Hare, who heads a group of retired Sears employees, said he had "grave concerns for Sears' future" and was applauded when he said the new, Kmart-dominated board of directors "will be more concerned about selling off Sears than the survival of Sears as a premier American retailer."
Lacy noted that the deal was good for shareholders and furthers Sears' strategy of moving away from shopping malls to more profitable off-mall sites. He also cited an anticipated $500 million in savings — $200 million from store conversions and other retail "growth" and $300 million from overlapping operations.
Employees have been concerned about the prospect of deep job cuts, especially at Sears' home base and Kmart's in Troy, Mich. Sears said some layoffs will be announced by the end of April from among the 5,000 people working at the two headquarters, but the vast majority of the work force of 400,000 will keep their jobs and the company will maintain a corporate presence in Michigan.
Thursday marked the last day of trading for Sears' stock. The merged company starts trading on the Nasdaq on Monday with the ticker symbol SHLD.
Investors in both old companies enjoyed double-digit percentage gains in the four months since the blockbuster proposal was first announced, and Kmart shares have leaped tenfold since its emergence from bankruptcy in 2003.