Sears to Close Stores

Sears Holdings Corp. said that it would close 100 to 120 Kmart and Sears stores in a bid to improve its business. The Hoffman Estates, Ill.-based retailer has posted negative eight-week and year-to-date comparable-store sales for both of its banners, which the company attributes to such factors as decreases in the consumer electronics and apparel categories, and lower layaway sales.

“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,” said Lou D’Ambrosio, CEO of Sears, the nation’s fourth-largest broadline retailer, with more 4,000 full-line and specialty retail stores in the United States and Canada. “These actions will better enable us to focus our investments on serving our customers and members through integrated retail -- at the store, online and in the home.”

Sears expects the store closures to generate $140 to $170 million of cash as the net inventory in these locations is sold, and anticipates generating additional cash proceeds from the sale or sublease of the related real estate. Further, the company plans to optimize the space allocation based on category performance in certain stores. Sears hasn’t yet determined which locations will close.

Additional measures to be taken by Sears include focusing on boosting gross profit dollars through better inventory management and more targeted pricing and promotion, reducing fixed costs by $100 million to $200 million, and carefully evaluating store performance going forward.

“While our past practice has been to keep marginally performing stores open while we worked to improve their performance, we no longer believe that to be the appropriate action in this environment,” Sears explained. “We intend to accentuate our focus and resources to our better-performing stores with the goal of converting their customer experience into a world-class integrated retail experience.”