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Sears, Kmart to close 100 to 120 units as comps slack in holidays

Gary Evans -- Home Textiles Today, December 27, 2011

Hoffman Estates, Ill. - At the hands of harsh comp-store sales declines over the holiday selling season, Sears Holdings Corporation today announced a list of planned actions - including store closings - to "improve and accelerate the transformation of its business."

Comp sales for the eight-week period ended Dec. 25 were -4.4% for Kmart, -6.0% for Sears Domestic and -5.2% total. Year to date, comps came in at -1.8% for Kmart, -3.3% for Sears Domestic, and -2.6% for the total company.

Kmart's quarter-to-date comp decline reflects decreases in the consumer electronics and apparel categories and lower layaway sales. In Sears Domestic's case, the decline was primarily driven by the consumer electronics and home appliance categories, with more than half of the decline in Sears Domestic occurring in consumer electronics. Sears apparel sales were flat and Lands' End in Sears stores was up mid-single digits.

"Given our performance and the difficult economic environment, especially for big-ticket items, we intend to implement a series of actions to reduce on-going expenses, adjust our asset base, and accelerate the transformation of our business model. These actions will better enable us to focus our investments on serving our customers and members through integrated retail - at the store, online and in the home," said Lou D'Ambrosio, ceo.

The company said it plans to close 100 to 120 Kmart and Sears full-line stores - an action that is expected to generate $140 million to $170 million of cash as the net inventory in these stores is sold, "and we expect to generate additional cash proceeds from the sale or sublease of the related real estate."

Furthermore, Sears said it intends to "optimize the space allocation based on category performance in certain stores."

Final determination of the stores to be closed has not yet been made. The final list of stores closing will be posted at when final determination is made.

Excluding the effect of store closures, Sears said it currently expects to reduce 2012 peak domestic inventory by $300 million from the 2011 level of $10.2 billion at the end of the third quarter as a result of cost decreases in apparel, tighter buys and a lower inventory position at the beginning of the fiscal year.

Going forward, Sears added that it will "carefully evaluate store performance...and act opportunistically to recognize value from poor performing stores as circumstances allow. While our past practice has been to keep marginally performing stores open while we worked to improve their performance, we no longer believe that to be the appropriate action in this environment. We intend to accentuate our focus and resources to our better performing stores with the goal of converting their customer experience into a world-class integrated retail experience."

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