By Suzanne Kapner and Laura Stevens 

For years, the only place Americans could buy a Kenmore stove or washing machine was at their neighborhood Sears or Kmart.

But there are fewer of those sprawling stores these days -- nearly 1,000 have closed since 2009 -- and people aren't buying as much from them. Purchases, even for bulky or expensive items, are shifting to Amazon.com Inc., which has become the start of most shopping trips.

That is one reason behind Sears Holdings Corp.'s decision, announced Thursday, to start selling its Kenmore appliances on the Seattle giant's website, the first time it will offer its in-house brand at a major rival.

The struggling department store chain is the latest to capitulate to Amazon, whose rapid growth has displaced traditional stores and left even powerful brands unable to ignore it. Nike Inc., one of the biggest holdouts, recently decided to start selling directly to Amazon.

For Sears, selling Kenmore outside its own stores or websites could give it a boost in sales, which have declined every year since 2007. "This will give the Kenmore brand access to a new set of customers who aren't necessarily shopping at Sears," said Dev Mukherjee, a former president of Sears home appliances, who now works at a private-equity firm.

But also it carries some risks. It gives shoppers one less reason to visit a Sears department store. "We believe most Amazon sales will simply cannibalize Sears stores," said Loop Capital analyst Anthony Chukumba, since other major retailers don't currently sell Kenmore.

Still, news of Amazon's move into appliances, one of the categories it hasn't deeply penetrated, rippled through markets. Investors dumped shares of big appliance sellers that have been benefiting from Sears's retreat. Home Depot Inc. and Best Buy Co. fell 4% apiece on Thursday.

Sears's long-battered shares jumped 11% to $9.62, while Amazon was trading near all-time highs at $1,029.27.

"We're comfortable with our competitive positioning from both a brand and service perspective," said a Home Depot spokesman. Best Buy declined to comment.

Kenmore is Amazon's first retail offering in major appliances. Previously, most major appliances available on Amazon were via third-party sellers on its marketplace.

Amazon, which started selling books online more than two decades ago, is now gaining ground in a number of categories, from office supplies to home goods. After a serious push into apparel a decade ago, it is now one of the biggest clothing retailers, according to a recent Morgan Stanley survey, second only to Wal-Mart Stores Inc.

Amazon's market value is closing in on $500 billion -- more than double Wal-Mart's -- while Sears hovers near $1 billion.

More than half of product searches now start at Amazon, according to personalization platform company BloomReach, versus 28% on search engines and even fewer at other retail sites. And an estimated 63 million loyal North American members of the company's Prime subscription program, according to UBS, offers brands big online customer reach.

Amazon has bigger ambitions than selling Kenmore products. The company plans to expand its reach in both furniture and appliances, according to people familiar with the matter. It is also building at least four massive warehouses focused on handling bulky items, the people said.

Under the Kenmore deal, Amazon will own the inventory but Sears will ship orders from its warehouses, a Sears spokesman said. Innovel Solutions, a unit of Sears, will deliver the goods to customers' homes and provide installation services, he said. The companies didn't disclose the terms of the deal.

The Kenmore name first appeared in 1913 on a sewing machine. The first Kenmore washing machine was introduced in 1927 and business boomed after World War II. The brand is currently produced by Whirlpool Corp., Electrolux AB and other manufacturers.

Sears's major-appliance sales fell 9.5% in 2016 to $3.76 billion compared with the prior year, according to TWICE, a trade publication. In addition to Kenmore, Sears sells other brands. The retailer ranks third, behind Lowe's Cos. and Home Depot, according to the publication.

Sears CEO Eddie Lampert, a hedge-fund manager who took control of Kmart out of bankruptcy and merged it with Sears in 2005, had been looking at strategic options for the company's top brands for more than a year, as the parent company's losses have mounted.

Earlier this year, he agreed to sell the Craftsman tool brand to Stanley Black & Decker Inc. for $900 million, helping to pay down debt and pension costs. Sears is still exploring options for its DieHard brand, Sears Auto Centers and its Home Services unit.

"The launch of Kenmore on Amazon.com will NOT significantly boost Sears's liquidity," wrote Bill Dreher, an analyst with Susquehanna Financial Group in a note to clients. "We suspect this is a move to beautify the Kenmore brand for divestiture and help alleviate some pressure, temporarily, of Sears as a going concern."

Mr. Lampert, who owns more than half of Sears's shares and is a large creditor, wrote in a blog post Thursday that the Amazon deal "is a testament to our commitment to unlocking value from our various assets."

The CEO has also been cutting spending and selling real estate to help the company fund its operations. He has also been financing the company, including a $200 million short-term credit facility that Sears announced on Monday.

Although that facility was marketed to others, only entities affiliated with Mr. Lampert participated in the financing, according to one investor. The Sears spokesman said the company is in ongoing discussions with various parties with respect to the loan facility.

Andrew Scurria and Imani Morse contributed to this article.

Write to Suzanne Kapner at Suzanne.Kapner@wsj.com and Laura Stevens at laura.stevens@wsj.com

(END) Dow Jones Newswires

July 20, 2017 17:34 ET (21:34 GMT)

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