EXCLUSIVEBRANDSOURCING RETAILER/WHOLESALER ...

have eroded by $10 billion to $ 43.3 billion; net income has improved only modestly up until this
recent year when it dropped by 49.5% to $ 150 million. The company closed 1,307 Kmart stores
(1,278 discount, 28 Super Centers, and 894 broad-line stores. Chairman Edward S. Lampert has
been trying to reinvent the company. In 2009, a new innovative collection of Kenmore laundry
products was introduced plus the new Canvas collection from Lands’ End. Also, new footwear
brands, including Protégé, were introduced as well as a complete product line for the home, using
the Cannon and Jaclyn Smith brands. Kmart recently introduced the 1,000+ sku Smart Sense
grocery brand to replace its American Fare brand in that category. For 2010, Sears planned to
extend the Kenmore brand further into new cooking and refrigeration categories. Working his
Wall Street expertise, Lampert in May 2006 endorsed the creation of KCD IP, LLC, “a wholly
owned, bankruptcy-remote subsidiary,” which issued $1.8 billion worth of (Sears brand) bonds,
backed by the intellectual property of its three biggest brands: Kenmore, Craftsman, and DieHard.
The bonds are held by its insurance subsidiary and do not have to be disclosed unless sold to
outside investors for cash. KCD began charging Sears royalty fees to license those brands and use
the royalties to pay off interest on the bonds. Since then, other licensees have been added. In
February 2010, Ace Hardware stores began selling Craftsman tools and in August 2011, Costco
club warehouse stores in the US also began selling Craftsman tools. Additionally, Sears in June
2011 agreed to license Dorcy International, Columbus, OH, a marketer of flashlight products, to
sell Sears DieHard brand alkaline/rechargeable batteries and flashlights to its retail customers
(department stores) in the US, Puerto Rico and the Caribbean. UPDATE: In December 2011,
Sears spun off its 89-store home improvement unit in California, Orchard Supply Hardware
(owned since 1996), as a separate publicly traded company. OSH reported a profit of $8.7 million
on $660.7 million in revenue in fiscal 2010. The stand-alone chain will trade as OSHS on the
NASDAQ exchange. Later in 2012, Sears announced oplans to spin off its 1,238 Hometown,
Outlet and hardware stores, as it did OSH. Reports also indicate that Sears plans to sell about onehalf
of its Canadian stores. The Kmart operation lately has introduced some new exclusive brand
collections, starting in 2011 with the Gordon Ramsay Everyday Kitchen Collection (cookware,
dinnerware, cooking utensils, and small appliances), using the name of the noted Michelin star
chef, Gordon Ramsay. In the fall of 2011, Kmart unveiled the Sofia Collection of apparel,
endorsed by celebrity actress-model Sophia Vergara. The line has since been extended into
accessories, shoes, jewelry, and intimate wear. In 2012, Kmart called on this star for another
endorsement: a new line of home products, under the Sofia by Sofia Vergara brand, covering
decorative pillows, 400 thread-count sheets, three-piece bed sets, fashion towels, rugs, shower
curtains, and other bath accessories. The products feature vibrant colors, rich details and,
according to a joint announcement by the partners behind this collection—Kmart, LF USAsubsidiary
of Li & Fung Limited(also in this database) and Latin World Entertainment Licensing,
“special attention to quality.” Sears, Roebuck and Company began in 1886 as a mail order house,
opened its first retail store in 1925 and became the largest US retailer by the mid- 20th Century.
Kmart was formed in 1962 as a discount store chain.
Procurement Contacts: Kim Coovert, Brand Manager-Own Brand Food & Drug; Steve Nelson,
Division Merchandise Manager).
SEVEN & I HOLDINGS CO., LTD.
8-8, Nibancho, Chiyoda-ku, Tokyo 102-8452 JAPAN
Tel: +81 (03) 6238-3000