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Sears sets sights on appliances

BY HBSDEALER Staff

Mixed with yesterday’s disappointing sales and earnings performance was an ambition to lead the nation in at least one category: appliances.

“We are focused on our best categories,” said Rob Schriesheim, executive VP and CFO, on a conference call with investors. “In Home Appliances, we are intent on reinforcing our position as the number one appliance retailer in the U.S.”

In the first quarter, same-store sales declined 14.5% at Sears and 7% at Kmart, contributing to a net loss of $303 million.

The company’s first quarter also saw an expansion of it’s appliance assortment in Kmart stores and a broadened assortment online. It also saw new products in the Kenmore laundry line.

Schriesheim also described Sears as a leader in Home Services. Sears completed to more than 12 million service and installation calls in 2014.

“Despite this leadership position, we believe that there is an opportunity for us to improve our service levels and response times to better serve our members,” he said. “We are devoting significant resources to ensure that we have the right people, processes and technology in place to deliver these improvements.”

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Fortune Brands prices $900 million bond issue

BY HBSDealer Staff

Fortune Brands says it is taking an advantage of its recent acquisition of Norcraft to put the entire company on more solid financial footing.

The company yesterday priced a $900 million registered public offering of senior unsecured notes, and it intends to use the proceeds to pay down its current revolving credit facility and for general corporate purposes.

“Our recent acquisition of Norcraft was not only strategic for our cabinets segment, but also provided an opportunity to secure long-term debt,” said Lee Wyatt, chief financial officer, Fortune Brands. “Our solid business model, consistent cash flow and strong balance sheet support the investment grade ratings received from all three rating agencies. Importantly, with the proceeds used to pay down our revolver, we will have significant financial flexibility to drive incremental growth.”

The transaction consists of two tranches: $400 million of 5-year notes due 2020 with a coupon of 3% and $500 million of 10-year notes due 2025 with a coupon of 4%.

In advance of the notes offer the Company received the following investment grade ratings: Standard & Poor’s BBB, Fitch BBB and Moody’s Baa3.

 

 

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Masco approves TopBuild spin-off

BY HBSDealer Staff

Masco Corporation's board of directors has approved its previously announced spin-off of TopBuild Corp.

“Last fall, we announced our plan to spin off TopBuild as part of our strategic initiatives to enhance shareholder value," said Masco president and CEO Keith Allman. "Under the leadership of Jerry Volas as its chief executive officer, I am confident that TopBuild is well positioned to operate as an independent public company. Following the spin-off, both TopBuild and Masco will have greater flexibility to focus on and pursue their respective growth strategies. For Masco, this is our ongoing commitment to create shareholder value by profitably growing in branded building products.”

Under the terms of the spin-off, the newly separate TopBuild will hold the assets and operations of Masco's Installation and Other Services businesses.

Masco will also distribute 100% of the shares of common stock of TopBuild, which will become an independent, publicly-traded company. It will be listed on the New York Stock Exchange under the symbol "BLD."

Masco is also waiting on an opinion from its special tax counsel, Davis Polk & Wardwell LLP, confirming the tax-free status of the spin-off to Masco and its stockholders (except to the extent of cash received in lieu of fractional shares).

Greenhill & Co., LLC and J.P. Morgan Securities LLC acted as financial advisors to Masco regarding the spin-off.

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