Embattled US department store retailer Sears Holdings is to axe more than 200 positions at its corporate offices, as part of ongoing efforts to return to profitability.
In an internal announcement yesterday (1 February), Sears said the job cuts will be primarily at its corporate headquarters in Hoffman Estates in Illinois, effective immediately, with positions in various business units and roles across the organisation impacted.
In a statement yesterday, Sears said it has made significant progress in its efforts to improve its financial position and sharpen its operating focus.
Steps taken by the US retail giant over the course of the last 18 months include, most recently, the closure of an additional 39 Sears and 64 Kmart stores and striking a deal to extend the maturity of its existing term loan.
Earlier this month, the company identified US$200m in additional cost savings it can make this year and secured more financing as part of a new plan to enhance liquidity and accelerate its return to profitability.
The new job losses come as no surprise, notes Neil Saunders, managing director of GlobalData Retail, adding that they underline the fact the company is now in the “painful position” of having to balance its books.
“Sears has a toxic mix of issues, with dramatically falling sales and rising debt levels putting enormous pressure on the company’s finances. Cutting jobs, shutting stores, and streamlining the organisation are all sensible and necessary responses.”
Despite this activity, Saunders says GlobalData his two main fears are that Sears will not be able to cut fast enough to put the company on an even keel; and that even with deep cuts, the retailer may still fall short of being profitable at an operating level.
“In our view, it will take more than cost-cutting to put Sears back on track,” says Saunders. “Ideally, sales need to increase – but this goal remains elusive. As such, we believe further action from brand sales, licensing and other asset monetising activities will be required to balance the books.”