Sears closings: At least 100 stores to be shuttered
Sears closings intended to shore up company's profits. Sears closings will affect Kmart stores, too, but not word on layoffs.
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Balter also said Sears' weakening performance may lead its vendors to start to worry about their exposure.Skip to next paragraph
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The company has seen rival department stores like Macy's Inc. and discounters like Target Corp. continue to steal customers. It's also contending with a stronger Wal-Mart Stores Inc., the world's largest retailer, which has hammered hard its low-price message and brought back services like layaway, which allows financially stressed shoppers to finance their holiday purchases by paying a little at a time.
The tough economy hasn't helped, either. Middle-income shoppers, the company's core customers, have seen their wages fail to keep up with higher costs for household basics like food.
But the big problem, analysts say, is Sears hasn't invested in remodeling, leaving its stores uninviting.
"There's no reason to go to Sears," said New York-based independent retail analyst Brian Sozzi, "It offers a depressing shopping experience and uncompetitive prices."
Sears Holdings Corp., based in Hoffman Estates, Ill., said that the store closings will generate $140 to $170 million in cash from inventory sales. The retailer expects the sale or sublease of real estate holdings to add more cash.
Sears Holdings appeared to stumble early in the holiday season, as it opened its Sears, Roebuck and Co. stores at 4 a.m. on Black Friday, the day after Thanksgiving. Rivals including Best Buy Co., Wal-Mart Stores Inc. and Toys R Us opened as early as Thanksgiving night. Sears stores had opened on Thanksgiving Day in 2010. Kmart has been opening on Thanksgiving for years.
A hint that trouble might be brewing came in mid-December when Sears Holdings unexpectedly announced that 260 of its Sears, Roebuck and Co. locations would stay open until midnight through Dec. 23.
Kmart's 4.4 percent decline in revenue at stores open at least a year was blamed on diminished layaways and a drop in clothing and consumer electronics sales. Part of Kmart's layaway softness likely stemmed from competitive pressure. Wal-Mart had said that its holiday layaway business had been popular. Toys R Us expanded its layaway services to include more items. Kmart's grocery sales climbed during the period.
Sears cited lackluster consumer electronics and home appliance sales for its 6 percent dropoff. Sears' clothing sales were flat. Sales of Lands' End products at Sears stores rose in the mid-single digits.
Sears Holdings said it also plans to lower its fixed costs by $100 million to $200 million and trim its 2012 peak domestic inventory by $300 million from 2011's $10.2 billion at the third quarter's end.
D'Ambrosio acknowledged in his internal memo that criticism over Sears Holdings' performance was likely to come, but that the company was prepared for the days ahead.
"We will bounce back and become stronger than ever," he said.