Sears, Kmart to Close 100-120 Stores After Poor Holiday Sales
Sears Holdings on Tuesday reported a sharp drop in holiday sales compared to a year ago, and said the results will force it to close 100 to 120 Sears and Kmart stores.
The company said the stores to be closed have yet to be identified.
Sears Holdings said sales at stores open at least a year, a closely watched retail measure known as same-store sales, tumbled 5.2% in the eight weeks ended on Christmas Day. That came from a 4.4% drop in sales at Kmart stores and a 6% slide in sales at domestic Sears stores.
“Given our performance and the difficult economic environment, especially for big-ticket items, we intend to implement a series of actions to reduce on-going expenses,” said Lou D’Ambrosio, CEO of the company.
Shares of Sears Holdings (SHLD, Fortune 500) rose 75 cents, or 1.6%, in pre-market trading following the announcement.
The Sears and Kmart sales results were in contrast to the broader industry. The National Retail Federation forecast before the start of the year that holiday sales would be up 2.3% this year, a target that was helped by record Black Friday sales following Thanksgiving. Final sales figures are not yet available.
Sears Holdings signaled that additional store closings may lay ahead for poor performing stores. More on holiday money
“While our past practice has been to keep marginally performing stores open while we worked to improve their performance, we no longer believe that to be the appropriate action in this environment,” said D’Ambrosio.
The company will also cut its inventory in the stores that will remain open by $300 million as a cost-cutting measure. The company estimates the closings will generate between $140 million to $170 million in cash as the inventory of the closed stores is sold off, and additional cash from the sale or sublease of the real estate.
Sears said it has set a target of another $100 million to $200 million in fixed cost cuts.
The company said due to the weak sales, it expects to take a non-cash charge on certain deferred tax assets of between $1.6 to $1.8 billion.
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