100 to 120 Kmart and Sears stores to close after slow holiday
Sears Holding Corp. said it would close 100 to 120 Kmart and Sears stores nationwide after all-important holiday sales at the chains proved to be disappointing.
Quarterly sales through Christmas were down 5.2% due to steep declines in apparel purchases and layaway sales at Kmart, home appliance performance at Sears and consumer electronics transactions at both. All this even after many of the stores offered special deals and extended operating hours for the holidays.
At this rate, Sears Holding expects its adjusted fourth-quarter earnings, to be announced in late February, to be less than half the $933 million it reported during the same period in 2010. The company’s stock was down nearly 24% to about $35 midway through the trading day.
The store closures will generate up to $170 million in cash, along with extra funds from selling or leasing the real estate, according to Sears Holding. The company has yet to announce the affected locations. The company operates more than 4,000 stores in the U.S. and Canada, including dozens in Southern California.
Sears Holding also said it would abandon its past policy of trying to boost “marginally performing stores” and would instead focus on the cash cows.
The Hoffman Estates, Ill.-based company said it planned to further improve its situation by lowering expenses, reducing and better managing inventory and offering more targeted pricing and promotions.
"Given our performance and the difficult economic environment, especially for big-ticket items, we intend to implement a series of actions to reduce ongoing expenses, adjust our asset base, and accelerate the transformation of our business model," Chief Executive Lou D'Ambrosio said in a statement.
-- Tiffany Hsu
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