24 June 2018

Sears Closing More Stores As Sales Shrink

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Sears Holdings Corp. SHLD -12.46% said Thursday it plans to close more than 60 stores it has deemed unprofitable, as the retailer continues to struggle with falling sales.

Sears has been closing hundreds of stores in recent years, selling brands and spinning off divisions to stay afloat amid mounting losses and the defection of customers to Walmart Inc., Amazon.com Inc. AMZN 0.29% and other outlets.

The company said it had identified 100 unprofitable stores overall and notified workers Thursday at 15 Kmart and 48 Sears stores that their locations would close later this year.

Sears also reported lower sales for its fiscal first quarter, extending a streak of declines going back more than six years. The last time quarterly sales rose from a year earlier was in the third period of 2011, when the once-dominant retailer posted $9.4 billion in revenue, according to data fromThomson Reuters .

In the quarter ended May 5, total revenue dropped 31% from a year earlier to $2.89 billion.

Same-store sales fell 13% at Sears locations and by 9.5% at the company’s Kmart outlets. The retailer operated 894 total locations as of the end of the quarter, down from 1,275 a year earlier.

Sears swung to a first-quarter net loss of $424 million from a profit of $245 million. The year-earlier period included a $741 million lift from asset sales. In the latest period, Sears recorded a $165 million benefit.

Sears is currently weighing whether to shed its Kenmore appliance brand and other units. The moves follow prodding by Sears Chief Executive Edward Lampert, who has proposed that his hedge fund purchase the assets if the company is unable to find other buyers. Mr. Lampert is Sears’s biggest investor and among its biggest lenders.

He said an April letter to the Sears board that his ESL Investments Inc., which owns a controlling stake in the retailer, is willing to submit offers for Kenmore, the Sears Home Improvement and Parts Direct businesses as well as some real estate, including $1.2 billion in debt secured by the properties.

Sears has hired advisers and said earlier this month that it initiated a formal sale process. On Tuesday, ESL, in another letter to the Sears board, said it had “received numerous inbound inquiries from potential partners,” and has requested permission from the special committee of the board to engage with such partners in order “to put forward a definitive proposal.”

Investors, suppliers and landlords have grown increasingly concerned about the company’s future, forcing Sears to pay cash up front for many goods and ESL to regularly extend the company credit. Sears’s Canadian arm filed for protection from creditors last year and decided to liquidate. Sears had spun off most of its stake in Sears CanadaSRSCQ -8.33% in recent years, but retained 12% ownership.

The company’s shares, which closed at an all-time high of $142.51 in April 2007, now languish at around $3. Shares fell 12% in Thursday trading, its largest single-day percentage decline in more than a year.

Last year, Sears struck a deal to sell Kenmore products on Amazon.com Inc., broadening its reach beyond Sears and Kmart stores. It also began selling its DieHard batteries on Amazon. In 2017, it sold its Craftsman brand to Stanley Black & Decker Inc., which is expanding distribution of the tools, lawn and garden equipment to other retailers.

Mr. Lampert’s interest in purchasing Kenmore and the other businesses extends a string of transactions in which he is often on both sides. In addition to serving as Sears’s chairman and CEO, he is also chairman of, and a major investor in, Seritage, which ranks among Sears’s biggest landlords.

Click here for the original article from The Wall Street Journal.

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