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Sears Canada Announces Another Round of Job Cuts: 624 This Time

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Only two weeks after announcing the gradual elimination of 1,628 jobs, Sears Canada reported plans to cut 624 more. Due to strategic restructuring, the retailer intends to lay off an average of five employees per store.

“Sears has been in a downward spiral for a long time and things certainly don’t point toward revitalization,” said Robert Soroka, professor at John Molson School of Business.

This has been a historically challenging year for Sears: it recently reported that it expects an adjusted loss between $213 million and $316 million for the fourth quarter, which amounts to as much as $2.98 per share. In response to the grim news, Sears’ shares dropped 13 percent to $36.98 from $42.57.

Sears Holdings’ comparable store sales dipped 7.4% for the quarter to date in the U.S. and 4.4% in Canada. Comparable sales for Sears stores in the U.S. are down 9.2% in the nine weeks that ended January 6, and down 5.7% for Kmart. ShopperTrak reported that U.S. retail sales for the industry at large have risen 2.7% for the same period.

For the fiscal year, Sears expects a loss as large as $914 million, potentially amounting to $8.61 per share. This is considerably worse than the loss of $6.20 per share most analysts have been predicting.

Industry experts anticipate that there will likely be more layoffs in the future, as Sears continues to close stores and shift retail online. Eddie Lampert, Sears’ President and CEO, as well as its top shareholder, explained that the store closings are necessary in response to the rise of online shopping. In  a blog post Tuesday, he wrote, “The consensus about decreased store traffic also highlights another decision that has steered our work: we very often need less space to serve our members better and we may need fewer locations as well. As difficult as these changes are, we believe the alternative of failing to plan for or even see where the retail industry is heading would be far, far worse.”

 

 

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