Sears Accelerates Store Closings
By Burt Carey
Sears, an American icon of department stores, announced this week that it will accelerate the planned closings of stores in 50 locations, following poor fourth quarter sales.
With holiday season sales figures falling short of expectations, Sears reported sales of $7.3 billion in the fourth quarter of 2015, down from $8.1 billion a year earlier. The result is $100 million short of the retail chain’s expectations for the quarter.
Sears Holdings, which also owns Kmart, blamed the losses on its sagging apparel business, which was affected by unseasonably warm weather and competition from other retail outlets.
Shares of Sears (ticker SHLD) stock dipped to $15.25 when the announcement was made Tuesday. In May 2015 its stock was selling at $45 per share.
Sears executives say they will speed up the closing of 50 unprofitable stores, which were expected to be closed over several months. While they did not say which stores would be closing, the retail giant will also look for ways to cut costs by $550 to $650 million this year, and signaled that employee numbers will be evaluated.
Based in Hoffman Estates, Ill., Sears will be looking to sell about $300 million worth of assets early in 2016, and is including a potential sale of it Sears Auto Center enterprise. It has already sold real estate investments.
Sears, which was the country’s largest retailer until Walmart displaced it in October 1989, has struggled in recent years, competing with other retailers, such as Target and H&M. It is now the fifth largest department store chain in the U.S., behind Walmart, Target, Best Buy and Home Depot. It has also encountered fierce competition for appliance sales from home improvement companies such as Home Depot and Lowe’s. Its retail standing has dipped, as well. Sears is now the 12th largest retailer in the country.
Apparel sales remain key to the Sears’ profitability, executives said, and they emphasized that the company will makes adjustments in clothing prices, variety and product sources.
The Sears & Roebuck Co., was founded in 1886 by Richard Warren Sears and Alvah Curtis Roebuck as a catalog company. It began retail operations in 1925. The company was purchased by Kmart in 2005, when the two corporations merged under the name Sears Holdings.
Sears will report final fourth quarter and annual revenue on Feb. 25.