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.
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