It signifies the importance of turning around the merchandise group.

A change in accounting procedures added $21.9 million more to net income in the merchandise group.

Sears, Roebuck announced a major restructuring of its merchandise group.

Mr. Brennan, however, declined to comment on further efforts to cut costs in the merchandise group.

But the breakup focuses the spotlight on the merchandise group as never before.

Sears's merchandise group continued to turn in a mixed performance.

And he sees Sears's apparel business, perhaps its most disappointing merchandise group, according to analysts, as "our biggest opportunity at this point."

He will report directly to Michael Bozic, chairman and chief executive of the merchandise group.

The merchandise group earned $207.5 million on sales of $13.2 billion in the first half of this year, up 2.7 percent from a year earlier.

For the first quarter, sales at the merchandise group rose 4.6 percent, to $6 billion.