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With Sears' Demise Feared, Which Agencies Stand to Lose?

By Published on .

Though it doesn't command the same media spend that it once did, Sears is still the sixth-largest retail advertiser in the U.S., according to Ad Age's Datacenter.
Though it doesn't command the same media spend that it once did, Sears is still the sixth-largest retail advertiser in the U.S., according to Ad Age's Datacenter. Credit: Mark Ralston/AFP/Getty Images
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The end could finally be near for long-struggling Sears and Kmart. Sears Holding Corp., parent company of the two brands, issued a warning in its annual 10-K filing Tuesday evening that noted the chain could be in trouble with generating additional liquidity.

"Our historical operating results indicate substantial doubt exists related to the Company's ability to continue as a going concern," read the filing.

The news caps years of sales declines and losses, and, more recently, January's announcement of the closures of 150 stores. Earlier this year, Sears sold its Craftsman tools brand to Stanley Black & Decker, ending decades of exclusivity.

Though it doesn't command the same media spend that it once did, Sears is still the sixth-largest retail advertiser in the U.S., according to Ad Age's Datacenter. Last year, the chain spent a total of $257.3 million on measured media in the U.S., according to Kantar Media. If the beleaguered retailer finally meets its demise, Havas, which was named agency of record in 2013 and retained the business in a review two years ago, could lose a substantial portion of business. Havas has performed creative duties for Kmart as well as Sears' Craftsman, Kenmore and Diehard brand group since 2015. A spokeswoman for Havas had no comment.

Over the holidays, Havas ran a quirky digital campaign for Sears that featured rowdy elves filming video in their basement in a low-budget-style series. Sears formerly worked with McGarryBowen until early 2015.

Kmart previously worked with FCB on notable commercials like 2013's "Ship My Pants" and 2015's "Inactivity Tracker," both of which were Cannes-winning campaigns, according to an FCB spokeswoman, who noted that the agency has not worked with Kmart in two years.

On Wednesday, a Sears spokesman declined to comment but pointed to a recent blog post, which clarified the 10-K statements and noted that the company is taking actions to mitigate its risks. Sears has increased its liquidity through secured loans and amended its existing asset-based credit facility, in addition to the restructuring program announced earlier this year to sell the Craftsman brand and generate more annual savings.

"In line with these initiatives, despite the risks outlined, we remain confident in our financial position and remain focused on executing our transformation plan," read the blog post.

Investors are not optimistic and sent the brand's stock spiraling down 15% by early afternoon trading. Shares currently trade near $7.70.

One brand expert said the news is further detrimental to the Sears/Kmart brand, which still retains some brand equity.

"As the store experience further declines, and everyone reads the headlines about the brand going downhill, it takes whatever value the Sears brand still has with consumers and totally detracts from that," said Denise Lee Yohn, a brand expert.

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