Sears to revamp merchandise, grow online

Executives for Sears Holdings Corp., parent of Sears and Kmart stores, said Tuesday that if the company doesn't get federal pension relief soon, it will be forced to close a "significant" number of stores.

But how many are in jeopardy was uncertain as board Chairman Edward S. Lampert and Interim CEO W. Bruce Johnson told shareholders the legendary company aims to grow despite the pension issue and a tough economy.

Part of their plan also includes moving the apparel unit out of its Hoffman Estates headquarters and opening a new apparel center in San Francisco with 200 workers. Some affected workers here were offered positions in San Francisco or elsewhere in the company, so the final layoff count was unavailable.

In addition, Sears will target mobile shoppers, expand its Internet offerings in ways that at times may direct shoppers to other stores, and relaunch its legendary Kenmore brand. Whatever happens, Sears won't look the same in five years, the executives said.

"We're embarking on a very significant transition," said Johnson.

The executives updated shareholders on their initiatives during the annual shareholder meeting in Hoffman Estates.

While high unemployment and the recession have chipped away at retailers and consumers alike, Sears said it has been supporting underperforming stores to keep people employed and to maintain a presence in those communities.

While the banking industry and others have gotten bailouts, Sears instead looked to the federal government for help to keep their pension funded. If the pension legislation now pending before the House doesn't pass, Sears would be forced to close underperforming stores. That would provide enough cash to fund the pension, said Lampert.

Sears needs about two years to help recover from market losses in 2008 and sees funding its pension for loyal workers as a priority, officials said.

Sears has funded its pension with about $1.2 billion in the last five to six years, Lampert said.

If the pension woes don't alter the outlook for the stores, then the Internet will. The traditional model of brick-and-mortar stores has been changing, as more consumers use the Internet for either research or purchase of products. More stores may become a hybrid acting as either a pickup or return site for Internet purchases or just offering displays or demonstrations, the executives said.

"We're looking at what are customers doing? What are their issues, and how do we solve that?" Lampert said.

Other meeting news included:

• Both Johnson and Lampert were vague on how much longer Johnson's "interim" CEO title will last, whether Johnson would be replaced with a permanent CEO, or if Johnson himself was looking elsewhere.

• The Kenmore Live Studio opened about a month ago in downtown Chicago and features many of Sears' appliances along with interactive demonstrations for cooking and fashion, among other interests, to attract the young urban consumer. It was being touted as the Apple store for appliances.

• Sears stores will be selling more 3-D TVs this year, after being one of the first retailers to launch the new technology bundled with the special glasses.

• New products are coming with the Bongo, Dream Out Loud and Country Living lines of clothing and home products.

• Smart Sense will be the new name of Kmart private label products, replacing American Fare and other products.

• Kmart will continue its layaway program.

• Sears will continue to revitalize its tool lines with new technology, including a single battery platform for many and an automatic hammer that instantly drives in nails with a touch of a button.

• Franchising the auto service centers is continuing with one deal signed and others in the pipeline. They're even considering the Sears franchise for some shuttered Chrysler and other dealerships.

• The 150 MyGolfer sites inside Kmart stores and the stand-alone MyGolfer store in Joliet will continue to provide Internet shopping and then pickup in the store. Sears executives said they're exploring a variety of ways to work with this concept.

• Sears will consider other vendors, including mobile phone service providers, who want to set up shop inside their stores, besides the optical, photo and other services already there.