Retailer Kmart says early Black Friday specials and its layaway plan are generating interest from consumers who want to stretch their dollars this holiday season.

Black Friday, the day after Thanksgiving, traditionally marks the start of holiday shopping.

But everything is different this year. Consumers, who are grappling with rising unemployment, a global financial meltdown and harder-to-get credit, have cut back on spending and are changing their shopping habits.

Kmart, a division of Sears Holdings, introduced weekly deals Nov. 2, and plans to offer new specials every Sunday leading up to Black Friday.

For example, some of the Kmart deals to be offered in this Sunday’s circular include a navigation system, normally priced for $179.99, selling for $99; and an MP3 player that normally sells for $69.99 priced at $39.99.

Spokesman Tom Aiello said Sears, Roebuck stores will begin offering similar deals on Nov. 16.

With this holiday season expected to be the bleakest in perhaps decades, many retailers are offering discounts to spur early buying. This week, Wal-Mart said it would introduce new price cuts every week until Christmas on items such as toys and food.

“When we did our planning for the holiday season, consumers told us that they wanted to shop earlier, to give them more selection and power to get the best deals,” Aiello said. “They also wanted to have ways to stay within a budget.”

He said more customers also expressed an interest in Kmart’s layaway plan that gives shoppers up to eight weeks to pay for and pick up purchases. Before the widespread use of credit cards, people commonly used layaway to buy things like big-ticket items.

“Layaway this year is up significantly over last year’s numbers,” Aiello said.

With the economy so bad, will other retailers revive their layaway plans?

(Photo: Reuters)

Sears, Roebuck is looking to grow home-goods sales by adding stores away from malls as shoppers flock to new retail centers.

That off-mall strategy includes more dealer stores located in smaller, rural markets, and home appliance showrooms in big cities.

Sears has about 860 dealer stores and 24 appliance showrooms, in addition to its more than 900 traditional mall-based stores. This year, the retailer is adding 75 dealer outlets and about 50 appliance showrooms, said Steve Titus, vice president of Sears Dealer Stores, in an interview.

The Hoffman Estates, Illinois, retailer is the top-selling U.S. appliance chain but has seen its dominance challenged as home-improvement stores such as Home Depot and Lowe’s expand their offerings.

Now, as Home Depot and Lowe’s cut their store growth in the slowing U.S. economy, Sears Holdings is looking to grow key businesses in hopes of benefiting when conditions improve.

The appliance showrooms (pictured), which include as much as 5,000 square feet, are located in high-traffic retail strips that also include other big-box stores such as Target.

Sears is hoping the appliance showrooms, which are currently in Minneapolis, Dallas, Houston, Atlanta and some other big cities, will help fill the gaps in areas not served by its mall stores or existing dealer stores.

“If we pull this off right, it could really help us grow our appliance business,” Titus said.

The dealer stores are locally owned and operated. Owners pay rent and expenses and Sears provides the products and pays a commission for selling them.

Even in the slow economy, “we have several hundreds of people requesting ownership of these stores right now,” Titus said.

Photo/Sears

Sears, Roebuck, looking to engage shoppers in new ways, is embracing a 3-D Web technology that will allow shoppers to try on clothes virtually from its Web site in an effort to replicate the in-store dressing room experience.

The retailer this week said it is partnering with IBM and My Virtual Model , a Montreal creator of virtual identity products, to revamp its Sears.com site so that consumers can search for clothing items by clicking on images and try on garments virtually.

From Sears.com, customers will be able to create an interactive model of themselves by giving info on weight, height and other features. They can then dress that model by clicking on blouses, pants and accessories. The technology enables buyers to mix and match outfits and change garment colors.

“We’re doing this to really drive an interactive experience with our customers,” said Rob Mills, vice president for Sears’ online business unit. “We’re trying to offer a lot of personalization.”

He said the virtual search function will be available on Sears.com in late October.

Sandy Carter, a vice president with IBM, said she expects this technology to eventually become the norm for online shopping.

“Today it’s being applied to apparel,” she said. “Tomorrow we see it being used with appliances and other types of merchandise.”

Photos/Reuters

The big white tent that houses New York City’s Fashion Week was joined by another, smaller tent on Wednesday. Set up behind the main event, in a corner of Bryant Park, Sears erected what it calls a “lifestyle exhibit.” Also housed under a white tent, the meandering exhibit was meant to showcase Sears’  brands – well-established names such as Kenmore appliances and more recent products like a new clothing line by rapper LL Cool J.

The tent was divided into rooms with themes like “Alpha Dog” that featured a DieHard motorcycle, and “Boho Grunge,” that had mannequins playing Rock Band.

Sears is certainly not the first retailer to try to raise its chic quotient by hosting an event in coordination with New York’s Fashion Week. In a memorable attempt to wow the masses, Wal-Mart held a fashion show in a Times Square studio during Fashion Week in 2005 to showcase its apparel. The location was chosen to make the show accessible to the public.

But low-priced retailers and Fashion Week have not always mixed well. In early 2007, Wal-Mart ended its Fashion Week participation after its shoppers proved more interested in basic, affordable clothes than trendy fashions like skinny jeans.

Sears said its tent was meant to wow the masses. But around 1 pm the tent was largely empty, except for a small crowd that had gathered to snap pictures with Dr 90210’s Robert Rey, who sells Shapewear at Sears. There was little signage on the tent explaining what was inside, leaving many in Bryant Park to walk straight by the exhibit.

Once inside, there were few mentions of Sears and nothing to explain to the visitor that all of the items on display were available for purchase at the retailer. Instead, the flyer being handed out to passers-by touted the appearances of Dr Robert Rey and LL Cool J.

Sears spokeswoman Amy Dimond said downplaying Sears’ brand was intentional. She said the tent was meant to “show the lifestyle that’s achievable at Sears” and was aimed at getting shoppers to “think about us in a different way.” Traffic in the tent had been “really good,” she said, and she expected a crowd at 5pm, when LL Cool J would arrive to sign autographs.

No matter how Sears ultimately judges the tent’s success, it did make one visitor extremely happy. Louisa Robbins, who lives in Yardville, NJ, said she was in Manhattan to visit her dentist and happened by the tent after her appointment. Clutching an autographed picture of Dr Rey, the 49-year-old mother of two said she was thrilled to get to take her picture with the plastic surgeon.

“Who knows,” she said, with a big grin on her face. “I may even get an operation myself.”

(Photo: Reuters)

Check out retailers’ profits and forecasts.

A discerning shopper, or investor for that matter, could browse the aisles of the retail financial world and come away with very different messages on the strength of the U.S. economy depending on which company’s results they chose.

On the plus side,  upscale jeweler Tiffany posted a better-than-expected profit and raised its full-year outlook, although that was driven by strong sales overseas. Tiffany expects U.S. same-store sales to return to growth in the fourth quarter. Shoe and hat retailer Genesco, and home-appliance and consumer-electronics retailer Conn’s also topped Wall Street’s views and boosted their forecasts.

For the pessimists out there, Williams-Sonoma saw its profit fall and it cut its forecast, while Sears Holdings also fell short of expectations amid the weak housing market.

Somewhere in the middle was discount store operator Fred’s, which reported a profit in line with what analysts were expecting.

Retailers have been hit in varying degrees as consumers dial back discretionary spending due to the pressure from high food and gasoline prices. Even as the U.S. economy grew stronger than first thought in the second quarter, economists see growth slowing as the year progresses.

Also in the basket:

Genesco posts better-than-expected profits; ups views

Williams-Sonoma profit falls, forecast cut

Sears Holdings profit falls short

Fred’s Q2 profit in line with market estimates

Michael Kors (but You Knew That) (New York Times)

(Photo: Reuters)

Rapper LL Cool J says he is just as passionate about selling a new clothing line at Sears as he is about his music.

His casual wear collection, to be rolled out at 450 Sears stores on Sept. 7, features clothes for men, women and children. Prices start at $24 for T-shirts, $50 for jeans and $60 for outerwear.

“I wanted to bring a whole new flavor to Sears and take it somewhere it had never been before,” LL Cool J (seen with models at right) told Reuters.

The hip-hop star has launched other clothing lines, including the upscale Todd Smith collection (his real name is James Todd Smith). But he said in an interview that he always wanted to create an affordable clothing line, and felt Sears, where he shopped as a kid, was the right retailer to partner with.

“I didn’t trust the LL Cool J brand to just any company,” he said.

His wife and four children are included in print ads for the clothing line that are set to appear in October issues of magazines such as Cosmopolitan, Spin and Vibe. Pictures (such as the one shown) for the campaign were taken by Mark Seliger, who photographed LL Cool J for the cover of Rolling Stone magazine many years ago.

The artist said he expects younger customers to seek out his new clothing brand but has no illusions that it will solve the woes at Sears, Roebuck, which is fighting to reverse a trend of sliding sales.

“Obviously I’m experiencing an incredible surge right now in my music and the different things I’m doing,” LL Cool J said. “But that being said, this isn’t about some guy single-handedly turning around a company.”

(Photo: Mark Seliger)

Home improvement consumers have spoken, and their choice of top retailer might surprise you.

Ace Hardware, the hardware cooperative with 4,600 stores, ranked highest in home improvement customer satisfaction for the second straight year, according to a J.D. Power and Associates study.

The 2008 study, conducted in March and April, tracked satisfaction with merchandise, price, sales staff, sales/promotions and store facility. Findings are based on responses from 9,770 consumers who bought a home improvement product or service within the past year.

Illinois-based Ace scored 791 points out of a possible 1,000 and rated high on sales staff and store facility measures.

Lowe’s came in second with a score of 784, followed by privately held Menards at 779. True Value, another cooperative, rated 774 on the satisfaction index. Home Depot, the biggest home improvement retailer, had a score of 753 and trailed Sears, which scored 767.

Lowe’s stood out for its merchandise, while Menards got high marks on price and promotions, the information services company said.

“Home Depot ranks lowest overall in our study primarily in its performance in the sales staff and store facility categories,” said Dale Haines, senior director of the retail and construction practice at J.D. Power.

Shareholders of Home Depot complained at last week’s annual meeting that finding goods on store shelves and workers to help customers was difficult. The company responded by saying it has stepped up store maintenance and hired electricians and other skilled staff.

As consumers pressed by higher gasoline and food prices spend less, service can be a key factor in determining where they’ll shop. “Retailers who are competing for that shrinking source of revenue can differentiate themselves by focusing on providing superior levels of customer service,” Haines said.

Meanwhile, Lowe’s told its shareholders on Friday that it was confident that it will rack up market share gains this year even as the slumping U.S. housing market continues to pressure sales.

“In a tough environment, great companies look for opportunities to strengthen their business,” Lowe’s Chairman Robert Niblock said.

(Photos: Ace Hardware and Lowe’s)

Sears Holdings Corp reported a quarterly loss this morning. But the thing that left analysts like Credit Suisse’s Gary Balter scratching their heads was the company’s expectations for higher earnings before interest, taxes, depreciation and amortization (EBITDA) for the full year.

“We are struggling with what we are missing in the context of Q1 being down over $385 million in EBITDA and other comments in the release that talk about the expected difficult sales and gross margin environment,” Balter said in his research note.

Sears said sales fell about 6 percent to $11.1 billion in the quarter. Total U.S. same-store sales were down 8.6 percent as the appliance, lawn, garden and apparel segments languished.

Balter described the second half of the past year for Sears as an “unmitigated disaster” with very high inventories, and expenses that pointed to sales levels that were not reached.

Noting that Sears was already a lean company, Balter said that its latest EBITDA plans implied expense declines of  over 14 percent — which to him, doesn’t seem a viable option unless, he said,  ”the company is planning for even lower service levels and liquidating the company.”

For the quarter, Sears said selling and administrative costs rose 6 percent. The Illinois-based retailer, which has reorganized into five types of business units, and has boosted spending in some areas.

The other alternative to achieve higher EBITDA, Balter said, could include gains on asset sales which he didn’t think would solve Sears’ longer-term issues.

And Sears didn’t seem to be helping him understand any of this  — Balter said in his note that ”there is no one at the company to contact.”

Can someone at Sears, please…?

(Photo: Reuters)

Check out quarterly results from retail companies, including Sears, Costco, Heinz and Big Lots.

Markdowns? No good for Sears. The company, controlled by Eddie Lampert, posted a surprise loss, hurt by discounts and floundering sales at its Kmart and namesake stores.  Immediate respite is not in sight, Sears said, as consumers juggle higher gasoline and food prices.

But discounts on the right products can mean good fortunes. Costco, for instance, reported a 32-percent jump in profit, thanks to consumers who sought deals on items like food and gasoline. Big Lots, which sells excess inventory, also posted higher profit, thanks to strong sales at stores open at least two years.

Ketchup-maker Heinz benefited from price increases and a weak U.S. dollar and is now hoping for higher annual earnings fueled by growth in emerging markets and health and wellness items.

Also in the basket:

Genesco profit up on settlement gain

Elizabeth Arden, Liz Claiborne in licensing agreement

Coach to buy retail business from distributor

U.S. first-quarter GDP growth revised to +0.9 percent

Food prices to stay high as biofuels blamed