Sears Exits Computer Software Business

According to an exclusive report posted on CMP's Computer Retail Week Web site, CRWi (http://www.crw.com/), Sears confirmed today that it is exiting the computer software business and calling an end to its merchandising arrangement with rackjobber Hendleman. All Sears stores that formerly carried software have already begun to liquidate stock by initiating 10 to 20 percent discounts on all software.

Sears's goal is to close out all inventory by June, CRWi reports. The publication also notes that the move comes as Sears's electronics/computer business appears to have bucked a nationwide downtrend, posting double-digit computer-store sales for the month of December as most rivals posted computer- store declines.

"We think it's a wise move for Sears," Computer Retail Week Editor Kevin Ferguson said. "Although they have done well in hardware, they have never been a leader in the software category."

Chuck Cebuhar, Divisional Vice President for Home Electronics at Sears, said that Sears plans to eventually replace the software departments with a selection of still cameras, including digital cameras. Sears is also examining other categories, including cellular and PCS phones and a broader selection of computer peripherals. He added that the decision to exit software won't impact Sears's participation in the PC category, and in fact may result in more profitable computer peripherals.

"We've done focus groups and software is not an emotional issue for our customers," Cebuhar said. "So as we get out of it and the software volume goes down, we think cameras will quickly go up in such a way that we'll have offset all that volume in the first year."

Ferguson added that other retail formats, particularly computer superstores, seem to be picking up software sales left behind by other retailers.

Ranked number 11 on the 1996 Computer Retail Week Top 100 Retailers list (Computer Retail Week, January 6, 1997), Sears generated $760 million in total computer-related sales, including $672 million in hardware sales, $48 million in accessories, peripherals and supplies, and $40 million in software sales, according to Computer Retail Week estimates.

Computer Retail Week, published by CMP, is the leading newspaper for technology retailers. It provides critical information about new alliances, technologies and products for a wide audience of computer hardware and software retailers, mass merchants, software specialty stores and other Channel members. For the past six years, Computer Retail Week has delivered breaking news weekly throughout the year. Breaking news stories can be viewed by visiting Computer Retail Week's home page -- CRWi -- at http://www.crw.com/.

CMP Media Inc. provides publishing, marketing and information services to the entire high-technology spectrum -- the builders, sellers and users of technology -- through print and electronic media. All of CMP's publications and online products can be accessed through the company's TechWeb® site on the World Wide Web (http://www.techweb.com/). CMP's print titles include Computer Reseller News, VARBusiness and InformationWeek.

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SOURCE: CMP Media Inc.

CONTACT: Leslie Dunbar of CMP Media, 516-562-7040 or ldunbar@cmp.com