Are the Kardashians Hurting Sears?
Andrew is a member of The Motley Fool Blog Network -- entries represent the personal opinion of the blogger and are not formally edited.
Sears (NASDAQ: SHLD) is well known for carrying top brands such as Craftsman, GE, Kenmore and Whirlpool. In an interesting move to increase focus on Sears' apparel, last year the retailer introduced the Kardashian Kollection. If you are unfamiliar with the Kardashians, you either don’t have a TV or only watch Mad Money. Either way, the Kardashians are famous for…well…I’m not really sure, but their TV shows are wildly popular so let’s go with that. In an attempt to ride this popularity and increase profitability, Sears, in all of its infinite wisdom, thought launching a collection of clothing, shoes, handbags and other accessories bearing the Kardashian name would be a good idea.
The Kardashian Kollection was released late August of 2011, in time for all the holiday shopping. Sears will announce their earning for Q4 2011 on Feb. 20, with mixed results expected. Analysts are predicting mean earnings per share of $0.78. This would be a substantial increase from $(2.57) a share in Q3 2011, but a far cry from $3.67 a share in Q4 2010. So why haven’t the Kardashians been able to save Sears?
Other apparel retailers such as Macy’s (NYSE: M) use celebrities such as Madonna, Usher and Donald Trump to sell certain apparel items to much more success. In 2011, Macys saw same store sales grow by 5.3%, most of which can be attributed to trendy apparel items designed by the still-popular Madonna and her daughter. Macy’s is proof that using celebrities to market apparel does lead to an increase in sales. Over the past three years, Macy’s has seen increased revenue combined with eight consecutive profitable quarters, compared to only two profitable quarters in the past eight for Sears. Macy’s has proven that using celebrities to market products can be a successful strategy, if it's the right celebrity.
If Sears' earnings fall below analyst expectations, things could really be getting desperate for Sears’ management. Sears was hedging the future of their apparel business on the popularity of a family who is popular for being popular. Instead of seeing improving sales figures and a revitalized Sears brand, this latest attempt for Sears to become relevant could backfire, literally leaving Sears holding the bag.
The Motley Fool has no positions in the stocks mentioned above. Andrew Dillard has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.