DETROIT (WWJ) – Sears Holdings plans to close up to 120 Sears and Kmart stores next year, following lackluster holiday sales.
Revenue dropped more than five percent for the quarter at both chains.
“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,” said Chief Executive Officer Lou D’Ambrosio.
“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.”
Specific actions which we plan to take include:
- Close 100 to 120 Kmart and Sears Full-line stores. We expect these store closures to generate $140 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. Further, we intend 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 list of stores closing will be posted at www.searsmedia.com when final determination is made.
- Excluding the effect of store closures, we currently expect 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.
- Focus on improving gross profit dollars through better inventory management and more targeted pricing and promotion.
- Reduce our fixed costs by $100 to $200 million.
The exact locations slated for closure haven’t been determined yet.
The two chains merged in 2005, with Kmart moving its main operations under Sears‘ roof in suburban Chicago.