• Sears has announced plans to close a further 72 stores as it revealed a net loss and a sharp decline in group sales in its first-quarter.
  • However, CFO Rob Riecker said stores will remain "a critical component in our transformation."
72 Sears and Kmart stores are set to begin closing sales

72 Sears and Kmart stores are set to begin closing sales

The finance chief of embattled US department store retailer Sears Holdings has admitted there is still much work to be done to return the company to profitability as it announced plans to close a further 72 stores.

Speaking on the firm's first-quarter earnings call yesterday (31 May), CFO Rob Riecker told analysts the company has remained focused on its strategic transformation, which has seen 200 job cuts at its corporate offices, and the continued closure of stores, including an additional 39 Sears and 64 Kmart stores already this year.

In February, Sears identified an extra US$200m in cost savings it intends to make this year and secured more financing.

Yet yesterday, Riecker admitted "there is still more work to be done" as the company revealed a net loss and a sharp decline in group sales in its first-quarter.

Losses amounted to US$424m from earnings of $245m in the prior year, which included a gain of $492m in conjunction with the sale of the Craftsman brand. Net sales slumped to $2.9bn from $4.2bn, with store closures contributing to nearly two-thirds of the decline. Total comparable store sales were down 11.9% during the quarter, which comprised a 9.5% decline at Kmart and a 13.4% decline at Sears.

Despite the declines, the retailer raised nearly $290m in proceeds from real estate sales, with the majority used to pay down Sears' real estate-backed loans.

Yet while Riecker said the company was pleased with the progress made on its capital structure initiatives, stores, he emphasised, will remain "a critical component in our transformation."

As such, Sears has identified a further 100 non-profitable stores, of which 72 Sears and Kmart stores are set to begin closing sales.

"These stores are expected to close by the end of the third quarter. Continuing to evaluate our store network and other initiatives will allow us to optimise our cost structure and enhance our liquidity, while staying focused on our best members, best categories and best stores," Riecker said.

"Our top priority is successfully executing our transformation to return to profitability and remain a competitive retailer for years to come. While we had a challenging first-quarter, we remain focused on improving our financial performance and enhancing our liquidity, both of which are critical to our long-term success."

Sears has cut its store count in half over the last five years. As of 5 May, the company had 894 stores, down from 1,980 in 2013. The retailer is now looking to raise further cash through a potential deal with ESL Investments, the hedge fund run by Sears' CEO Eddie Lampert.

"Sears' leadership continues to work hard each and every day on enhancing our financial performance and making progress on our transformation," Riecker said yesterday. "To extend our runway as we work to transform and position our business to better compete in today's retail environment, we will continue to take proactive steps to strengthen our balance sheet through various capital structure and liquidity initiatives."