The full list of Sears and Kmart stores that will be shuttered now totals 150.
Sears Holdings is still trying to establish a winning formula for recovery and as part of that effort has announced another round of store closings and the sale of the Craftsman brand, according to a press release. The company plans to close 108 Kmart and 42 Sears will be shuttered in early 2017, as outlined in an internal document obtained by Business Insider. This is in addition to the stores already slated for closure in 2016, bringing the total number of shuttered stores to more than 200. By early 2017, Sears Holdings will have fewer than 1,500 operating stores remaining, a 60 percent drop from 2011 when Sears had more than 3,500 stores.
According to the company statement, “these actions will facilitate the transformation of Sears from a store-based, asset-intensive business model into a membership-focused, asset-light business model.”
The store closures are an effort to help counter losses from falling sales, as reported in the most recent quarter, when Sears' revenue fell 13 percent, to $5 billion. Sears also reported that its losses widened to $748 million from $454 million in the period last year. Same-store sales dropped 7.4 percent, including a 10 percent decrease at Sears stores and a 4.4 percent decrease at Kmart stores.
"The decision to close stores is a difficult but necessary step as we take actions to strengthen the Company's operations and fund its transformation. Many of these stores have struggled with their financial performance for years and we have kept them open to maintain local jobs and in the hope that they would turn around. But in order to meet our objective of returning to profitability, we have to make tough decisions and will continue to do so, which will give our better performing stores a chance at success," Mr. Lampert said.
As part of its recovery strategy, Sears had taken two additional actions. According to CNBC, in an SEC filing, Seritage Growth Properties, the real estate investment trust that Sears CEO Eddie Lampert spun off from the retailer, said that Sears had exercised its right to terminate the leases on 19 unprofitable stores. This will reduce Sear’s annual rent base by $5.9 million.
Lambert asserted, “We are taking strong, decisive actions today to stabilize the company and improve our financial flexibility in what remains a challenging retail environment. We are committed to improving short-term operating performance in order to achieve our long-term transformation.”
“Going forward,” Lambert explained, “Sears will be more focused on our Shop Your Way membership platform, a network with tens of millions of active members, and our Integrated Retail strategy in order to be a more nimble, innovative and relevant retailer that is better able to provide value and convenience to our customers. We are confident that concentrating on these key initiatives will lay the foundation for growth over the long-term.”
Sears also has entered into a $500 million committed secure loan facility that will mature in July 2020, secured by mortgages on 46 properties own by the company’s subsidiaries, CNBC reported. “This loan facility will provide Sears Holdings with additional financial flexibility and support our operations as we meet all of our financial obligations," Jason Hollar, Sears' chief financial officer, said in a statement.
