Closings are part of larger initiatives to restoring profitability.
Sears Holdings Corp. has announced the shuttering of 68 Kmart and 10 Sears stores nationwide this summer, as part of larger initiatives to restore profitability to the retail chain for 2016. Earlier this month, Sears leveraged its real estate assets to secure a 15 month $500 million loan to boost its omnichannel initiatives, as Innovative Retail Technologies reported. The move also follows the company’s February announcement that it would accelerate closings of underperforming stores.
Sears has struggled recently, with the closure of some 50 stores and Q4 revenue declines of $796 million, even as the retailer searches for flexibility in its turnaround through cost-cutting and other efficiency initiatives. The Shop Your Way program has gotten some positive response from retail experts and customers, but it is unclear how much this is helping Sears’ overall turnaround.
Sears expects the newly announced closures to “generate a meaningful level of cash” as it liquidates store inventory and sells or subleases some of its real estate. Along with more than $1.2 billion in debt financing the company disclosed earlier this month, Sears says it believes it “has taken important steps toward its primary 2016 objective to restore profitability.”
"Sears Holdings will continue to transform as the role of the store evolves to fit the way that members want to shop," Mr. Lampert said. "Through our continued investments in Integrated Retail, our stores are a critical component of our strategy as we provide our members with industry-leading innovations such as Meet with an Expert, In-Vehicle Pickup and Return and Exchange in Five."
Those stores targeted for shuttering will close in late July, with the exception of two Kmart stores that will close in mid-September. Eligible associates impacted by the closures will receive severance and have the opportunity to apply for open positions at area Kmart or Sears stores.
"The decision to close stores is a difficult but necessary step as we take aggressive actions to strengthen our company, fund our transformation and restore Sears Holdings to profitability," said Edward S. Lampert, Chairman and Chief Executive Officer of Sears Holdings. "We're focusing on our best members, our best categories and our best stores as we work to accelerate our transformation."
