As part of its ongoing efforts to streamline operations and focus on its best stores, Sears Holdings Corp. said it has identified about 100 non-profitable stores, 72 of which will begin store closing sales in the near future.
The company said, “We continue to evaluate our network of stores, which are a critical component in our transformation, and will make further adjustments as needed and as warranted.”
Christina Boni, Moody’s vice president, said, “Sears continues to struggle to bring its business to profitability with comps again falling 11.9% in the first quarter. The additional store closures announced today [are] another effort to streamline in the face of its shrinking core operations. Its continued efforts to enhance liquidity will be necessary to fund its ongoing operating losses.”
The company identified 15 Kmart stores and 48 Sears stores that will be closing in early September, and noted that nine stores stores on the closing list currently are under reevaluation. Eligible associates impacted by these store closures will receive severance and will have the opportunity to apply for open positions at area Kmart or Sears stores.
Liquidation sales will begin as early as June 14 at these units. This is on top of the 103 locations the company said it was closing in January. Sears and Kmart operated 894 stores at the end of the first quarter, 381 fewer than it did a year ago.
The store-closing announcement came as the company reported a net loss of $424 million for the first quarter ended May 5, compared to net income of $245 million for the first quarter of 2017, which included a gain of $492 million in conjunction with the sale of the Craftsman brand.
Revenues in the quarter fell 45 percent to $2.9 billion from $4.2 billion in the prior-year quarter, with store closures contributing to nearly two thirds of the decline. Comparable store sales declined 11.9% during the quarter, comprised of a 9.5% decline at Kmart and a 13.4% drop at Sears.
Edward S. Lampert, chairman and CEO, said, “In a challenging quarter, we continued to focus on our strategic transformation, identifying additional opportunities to streamline operations and adjust inventory and operating expenses.”
Lampert said the company remains committed to restoring positive earnings and will explore third-party partnerships involving several of its businesses, such as Sears Home Services, Innovel, Kenmore and DieHard. Sears will also look to focus on new, smaller store formats that blend brick-and-mortar and online.
The company said a special committee of the board of directors has initiated a formal process to explore the sale of the Kenmore brand and related assets, the Sears Home Improvement Products business of the Sears Home Services division and the PartsDirect business of the Sears Home Services division.