The Amazon deal
On August 28, Sears Holdings (SHLD) announced that it had rolled out its ship-to-store tire solution in partnership with Amazon (AMZN) across its entire store base. Sears stock jumped 12.6% and closed at $1.25. However, on a YTD basis, Sears is still down 65.1%.
In May 2018, Sears and Amazon signed a deal whereby Sears Auto Centers will provide free tire installation for any tire purchased on Amazon. Customers who purchase tires on Amazon who opt for tire installation services can choose their preferred Sears Auto location along with the time and date of their appointment.
Sears initially piloted the service at 47 of its auto centers in areas such as Miami, New York, Atlanta, Chicago, Dallas, and Washington, DC. In the press release, Sears Automotive’s vice president and general manager, Mike McCarthy, said, “Providing excellent auto service, such as fast installation and free Performance Snapshot evaluations, is at the core of our business and partnerships. By working with Amazon, we’re proud to further meet and surpass that commitment, thanks to the ease and convenience of their program.”
Sears is in dire straits
Sears is in deep trouble as it continues to witness top-line erosion and muted profitability. The company has undertaken several initiatives including cutting costs and debt financing. It is also selling assets to repay debt.
Earlier in August, ESL Investments announced its intention to acquire the Kenmore brand for $400 million. ESL Investments also proposed buying Sears’s home improvement products business for another $70 million. Sears sells Kenmore brand appliances and some DieHard brand products on Amazon.
Store closures are part of the company’s cost reduction strategy. However, store closures are adding to top-line erosion. For the fiscal first quarter of 2018, Sears’s sales plummeted 31.2% to $2.89 billion, largely due to closures. A few days back, the company announced that it would shut down 46 more stores in November. Unkempt stores and a reduction in merchandise are also driving away shoppers.