By  on November 18, 2004

The vendor community, while caught off guard by news of the deal, were mostly optimistic in assessing the potential of this new retail goliath — even though there were unanswered questions about the retailer’s future.

“I feel more positive about the combination of these two sick puppies than I do negative about it,” said one vendor executive who spoke on the condition of anonymity.

“Nobody has a clue as to what’s going to happen,” said the executive. “Maybe [Edward] Lampert does. Maybe he doesn’t. Both Sears and Kmart are moving into the great unknown.”

There might be plenty of question marks surrounding the future of the company, but some vendors see opportunities to expand their businesses as a result of the merger.

“We don’t do nearly as much with Kmart [as Sears],” said Kellwood Co. chairman and chief executive officer Hal Upbin. “I hope we would start to do more business with Kmart as they start to review the merchandising options.”

Kellwood, with overall annual sales of $2.35 billion, counts Sears as its second- largest customer after J.C. Penney. The deal was a surprise to Upbin.

“It wasn’t on my radar,” he said. “I think it’s smart, though.”

Kellwood was created in 1961 by the merger of 15 independent Sears suppliers and has since expanded its business though a series of acquisitions.

Upbin, a dealmaker himself, said making better use of the two retailers’ real estate is a “prime result” of the merger.

Even if some Kmart stores convert to the Sears banner, Upbin is not expecting either one of the names to go away.

“Is that possible? Anything’s possible,” he said. “I really think they both have a reason to be. I would be really surprised if they didn’t continue the two brands as independent, but blending the best of each.”

Peter Boneparth, ceo of Jones Apparel Group, said Sears was gunning for significant off-the-mall growth. He said it was too early, however, to tell if there was a chance to pick up significant business with Kmart under the new structure.

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