Sears cuts staff, plans new promos

Discount Store News, Oct 1, 1990 by Arthur Markowitz

Sears Cuts Staff, Plans New Promos

CHICAGO -- Sears has made further cuts in its corporate and merchandising group staffs and launched new marketing programs in an effort to revive its flagging retailing business.

But the short-term success of Sears' ongoing drive to improve its fortune was questioned by Moody's Investor Service, a major debt rating service. Moody's lowered the ranking of about $6.9 billion of long-term debt issued by Sears and some of its subsidiaries.

The staff cuts involved the elimination of four top executive positions, the consolidation of four merchandise and corporate departments, and offering cash incentives to 600 administrative staffers to retire. The retailer is considering making a similar offer to another 1,400 employees.

The marketing efforts are:

* The SearsCharge Bonus Club frequent shopper plan. Each time customers use a Sears credit card to buy $200 or more worth of goods, they receive a Bonus Club certificate worth 1% of those purchases in their regular monthly charge statement.

The certificates can be used on future purchases at Sears stores and through its catalog as well as for auto repair, optical and other services. * An exclusive multi-media $5 million (gross value) advertising program with Time magazine. Sears is the only advertiser in a Time special issue on women being distributed this month and will sponsor a nationally syndicated Time TV special on women being broadcast this month.

The special issue, which will have 30 pages of Sears ads, will be distributed to the magazine's paid circulation of four million subscribers and Sears employees and sold on newsstands. The issue will be circulated for the entire month.

Sears will be the exclusive national retail advertiser on the one-hour TV special which will be aired on a commercial TV network--composed of both affiliated and independent broadcast stations--being put together by Golden Gate Productions, co-producer with Time of the program. Sears will be cited in the opening and closing billboard, along with running ads during the broadcast.

As for the staff cuts, Sears chairman and ceo Edward A. Brennan said, "We are eliminating a layer of management and consolidating certain corporate and merchandise group staff areas as part of an ongoing companywide effort to reduce expenses."

Brennan has been under growing pressure to reduce Sears' costs and boost profits. In August, he took over day-to-day control of the lackluster merchandising group, removing Michael Bozic, then chairman and ceo of that operation (see DSN, Aug. 20).

Brennan's action was the latest step in a series of moves to revive the merchandising group. Last year it carried out a reorganization of the merchandising group, but to little avail, as sales continued to be weak and profits dropped.

In the reorganization, the heads of six merchandising areas--home appliances and entertainment; home fashion's; men's and children's apparel; women's apparel; home improvement, and automotives products--now report to Laurence E. Cudmore, president of retail. Previously, the hard lines executives reported to Matthew A. Howard and soft lines to Eric D. Saunders, both senior executive vps.

Howard was named sr.vp of marketing, succeeding Thomas E. Morris, vp of marketing, while Saunders became vp, home fashions group, succeeding Jerry A. Hand. Morris and Hand have resigned.

Four corporate and merchandising group departments have been combined:

* Planning, headed by vp Jane J. Thompson. Robert E. Wallace, vp, planning and research for the merchandise group will work on a special project reviewing all phases of inventory management. * Human resources, headed by vp Warren F. Cooper. Con S. Massey, senior vp, human resources and administration is retiring. * Law, headed by senior vp David Shute. Vincent Jones, vp and general counsel for the merchandising group is deputy general counsel. * Public affairs, headed by vp Charles J. Ruder.

Moody's downgraded the Sears debts because "improvements within the intensely competitive merchandising sector hasn't been nor will be achieved as quickly as [Sears] originally anticipated."

PHOTO : A new Sears in Manchester, N.H.: Troubled retailer plans a frequent shopper incentive

PHOTO : program to boost sales and a $5 million media campaign with Time magazine.