US: Sears to close up to 120 stores
Sears has revealed plans to close as many as 120 stores after recording poor holiday sales.
The company said that it would close 100-120 stores after it booked a 5.2% decline in comparable quarter-to-date sales for the period ended 25 December. It added that beyond these closures, it will continue to "carefully evaluate store performance going forward" and "act opportunistically to recognise value from poor performing stores as circumstances allow".
"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. We intend to accentuate our focus and resources to our better performing stores with the goal of converting their customer experience into a world-class integrated retail experience," the company said on 27 December.
Sears Holdings attributed the decline in comparable store sales to falling consumer electronics sales in both the Kmart and Sears banners, as well as lower apparel and layaway sales at Kmart. However, Sears apparel sales were flat and Lands' End in Sears stores were up mid-single digits.
It expects to raise between $140-170m of cash as the net inventory in these stores is closed, with additional cash to be raised from the sale or sublease of the related real estate.
Beyond the store closures, the company said it is also working to reduce its peak inventory by $300m at the end of the third-quarter due to cost decreases in apparel, tighter buying and a lower inventory position. It is focusing on improving gross profit through better inventory management and more targeted pricing and promotion and reduce fixed costs by $100-200m.
"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, adjust our asset base, and accelerate the transformation of our business model. These actions will better enable us to focus our investments on serving our customers and members through integrated retail - at the store, online and in the home," said CEO Lou D'Ambrosio.
In November, Sears recorded widening third-quarter losses, with losses reaching $421m, against a loss of $218m in the same period of the previous year.
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