Drips and drabs. That’s how Sears Holdings is chipping away at its store base—but will the end result be a leaner, stronger company or a bankrupt entity?
The retailer, which operates Sears and Kmart, announced in a blog post on Friday that it would shutter 43 more stores. The slate of closings, which number more than 300 this year, have been slowly rolled out over the last seven months.
In addition to the cuts that had been announced prior to 2017, the company announced 150 more in January, comprised of 108 Kmart locations and 42 Sears stores.
[See how many stores apparel retailers plan to close thus far in 2017: Infographic: Apparel Store Closures By Category]
Then in April, 92 Kmart pharmacies and 50 Sears Auto Centers found themselves on the block.
While there was no official announcement, 30 more closures (12 Sears and 18 Kmarts) took place in May.
Again in June, about 66 more locations went dark without any comment from the retailer. In this case, reports said it was 49 Kmart locations and 17 Sears locations that were to close.
Later that month, the company announced it was letting 400 people go, primarily from corporate positions. And media outlets said 20 more locations were closing.
The company is closing stores in an attempt to cut its way to profitability. Sears has set the goal of saving $1.25 billion by the end of 2017, of which it as already achieved $1 billion in savings. In addition to these efforts, the company has sold its Craftsman brand as well as valuable real estate holdings.
[Learn more how other retailers are working to survive these turbulent times: Transformation Nation: A Comparison of Department Store Survival Plans]
Sears also announced on Friday that it has amended an existing second line credit facility to provide up to an additional $500 million in borrowing capacity, funded by the company’s CEO Edward Lampert, who has come to the retailers’ rescue multiple times in the past.
The press release also noted the company earned $200 million from real estate deals in June, which has allowed it to pay down a $500 million real estate loan to $347 million.
In the accompanying blog post, Lampert called on Sears’ vendors to continue to support the chains. “We reached the point in the past 12 months where some of our vendors have reduced their support thereby placing additional pressure on our business,” he said.
These comments come after Sears stated in an SEC filing that it had “substantial doubt” that it could continue as a going concern. That was followed by reports that vendors were pulling back. It all culminated in public spats between Lampert and certain vendors, who he said were taking advantage of the retailer, and the press, which according to him was piling onto a difficult situation.
The apparent issues with certain suppliers might help explain reports of the deplorable state some Sears and Kmart stores have fallen into.
Business Insider has published several stories lately showing and describing locations with nearly empty shelves, non functioning plumbing and collapsing ceilings. At least one of the locations mentioned in the articles is listed among those that are now scheduled to close.
While Lampert remains optimistic and upbeat in his public statements, many analysts list the company on their lists of retailers likely to fail sooner than later. Some even noted that the bankruptcy filing of Sears Canada was a possible sign of things to come for the U.S. business.