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More Kmart Closures on the Way This Year

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Kmart
Five months after Sears Holdings said it would shut 68 Kmart stores, more closures are coming.

Kmart employees in at least 13 states were informed Friday that their stores will close before the end of the year, Business Insider reported. Liquidation sales at the affected locations are scheduled to start this Thursday.

“We have been strategically and aggressively evaluating our store space and productivity, and are accelerating the closing of unprofitable stores as we have previously announced,” Howard Riefs, Sears Holdings director of corporate communications, said in a statement released to local media.

No word yet on how many people will lose their jobs, but Riefs said eligible employees will get severance packages and “have the opportunity to apply for open positions at area Sears or Kmart stores.”

In other news, the struggling retailer’s real-estate investment trust, Seritage Growth Properties, filed an 8-K form with the Securities and Exchange Commission (SEC) Friday that revealed Sears’ plan to terminate leases on 17 unprofitable stores that had been sold to Seritage, totaling 1.7 million square feet.

According to the filing: “The aggregate annual base rent at these stores is approximately $5.8 million, or 2.8% of the company’s total annual base rent as of June 30, 2016, including all signed leases. Sears Holdings will continue to pay Seritage rent until it vacates the stores which is expected to occur in January 2017.”

RBC Capital Markets analysts said that all 17 leases are Kmart stores, though the filing did not specify this.

Moody’s Investors Service recently downgraded Sears Holdings’ Speculative Grade Liquidity rating, from SGL-2 to SGL-3, to reflect its view that Sears and Kmart will need to borrow more money or sell more real estate to fund its operating losses.

The price of Sears shares (SHLD) is down 2.82% over the last five days.

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