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Sears is going to sell Alexa-enabled appliances on Amazon; shares jump 19%

  • Sears has landed a deal to sell appliances on Amazon.com.
  • Sears said a new "Kenmore Smart" skill for Amazon Alexa will allow customers to control their appliances by voice commands.
  • Sears' stock jumped following this announcement on Thursday morning.

Add Sears to the growing list of retailers signing deals with Amazon.

The department store chain announced plans on Thursday to sell Kenmore-branded appliances on Amazon.com. Sears also said its Kenmore Smart appliances will be integrated with Amazon's Alexa platform.

Shares of Sears' stock were climbing more than 25 percent at one point in trading before the market's open following this news.

"The launch of Kenmore products on Amazon.com will significantly expand the distribution and availability of the Kenmore brand in the U.S.," Sears CEO Eddie Lampert said in a statement.

"At the same time, Sears Home Services and our Innovel Solutions unit will benefit from the relationship as more customers experience their quality services for Kenmore products purchased on Amazon.com."

Sears said a new "Kenmore Smart" skill for Amazon Alexa will allow customers to control their appliances — changing the temperature on an air conditioner without leaving the sofa, for example.

Appliances have long been Sears' bread and butter in the retail world, but lately the space has become more crowded, with players like Best Buy, Costco and J.C. Penney looking to take a larger slice of the market. As Sears has struggled with heavy debts and slumping sales, these players have been gaining ground in the category.

Shares of Home Depot, Lowe's and Whirlpool — other providers of home appliances — were all falling more than 3 percent Thursday morning after Sears' announcement.

In partnering with Amazon, Sears is looking to expand its reach and grow the Kenmore nameplate. However, the move is a double-edged sword, because it also gives shoppers another reason to avoid heading to a Sears store.

Appliances are one of the categories that have helped draw customers. Just last month, Sears opened a store — the first of its kind for the company — that only sells mattresses and appliances. Plans are also underway to open additional freestanding Sears stores dedicated to these two categories — what Sears has called "two of its strongest."

"This is consistent with Sears' aim of becoming more of a remote seller of strong brands without the encumbrance of expensive real estate," GlobalData Retail Managing Director Neil Saunders told CNBC. "The move makes sense as it puts Sears' brand products where customers are shopping and gives them a better chance of selling."

"That said, in the short term it may create even fewer reasons to visit Sears' shops, which could put further pressure on that side of the business," Saunders added.

"It also puts Sears into a marketplace which is very price competitive and where fulfillment costs are high; this is something that may be challenging for margins."

Sears Holdings has been trimming its real-estate portfolio — which includes both Sears and Kmart stores — and laying out plans to shutter many of its big-box locations, which the retailer has said are no longer profitable.

Earlier this year, media shy CEO Lampert sat down for an interview with the Chicago Tribune in which he said the retailer is "fighting like hell" to battle negative headlines and pessimism regarding Sears' ability to continue.

On Monday, making another step forward instead of back, Sears announced it had landed a fresh line of credit, valued at $200 million. The money comes from Lampert, who also leads a hedge fund called ESL Partners.

Cash injections from ESL Partners and Lampert's heavy ownership of the chain's unsecured debt continues to convince some investors that Sears will avoid filing for bankruptcy protection. Sears' stock is up about 28 percent from one month ago, as of Wednesday's close.

Sears expressed doubts in a filing with the Securities and Exchange Commission earlier this year about its ability to continue as a going concern. The retailer, though, has said it's remaining focused on long-term profitability and on taking actions to mitigate risks.

Signing a deal with Amazon could drive Sears' profitability, should the retailer be able to reach new customers online.

"The Amazon platform is so broad and also focuses on the millennial generation, which is very important for Kenmore to reach," Tom Park, the president of Kenmore, Craftsman and DieHard divisions at Sears, told CNBC in an interview Thursday, discussing how a partnership with Amazon came about.

When a user visits Amazon.com in the future to search for a refrigerator, Sears' Kenmore is going to be a top brand that pops up, Park said.

Read the full press release from Sears.

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