Sears Holdings Corp., one of the biggest U.S. retailers of major appliances, said Monday it will close 100 to 120 of its Kmart and Sears full-line stores.
The announcement came Dec. 27, 2011, when the company announced comparable store sales results for its fiscal quarter that ended Dec. 25, 2011:
• Kmart store comps were down 4.4% for the quarter-to-date (QTD) and were down 1.8% for year-to-date (YTD).
• Comps at Sears domestic U.S. stores were down 6.0% QTD and were down 3.3% YTD.
• Total comps were down 5.2% QTD and were down 2.8% YTD.
Kmart QTD comps reflected decreases in the consumer electronics and apparel as well as lower layaway sales.
More than half of Sears Domestic's QTD sales decline came from decreases in consumer electronics, but also from home appliances.
The retail company now expects fourth quarter consolidated Adjusted EBITDA will be less than half of the previous year's, which was $933 million.
In response, CEO Lou D'Ambrosio said, the company intends to reduce ongoing expenses, adjust assets, and accelerate the transformation of its business model. Those actions include:
• Closing 100-120 stores (the company said a list would be released later), to generate $140 to $170 million in cash from inventory sales.
• Further optimizing space allocation based on category performance in other stores.
• Reducing 2012 peak domestic inventory by $300 million from the 2011s $10.2 billion, to be accomplished by decreases in apparel, tighter buys, and lower inventory at the start of 2012.
• Improve profit dollars with better inventory management as well as better targeting of pricing and promotion.
• Reduce fixed costs by $100 to $200 million.
In the future, Sears said it will be quicker to close underperforming stores, rather than keep such stores open as efforts are made to improve their performance. A Sears statement said, "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."
Final financial results for the quarter and the full fiscal year will be released in February.
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