The End? Sears to Close 100-120 Kmart and Sears Stores
- Posted on December 27, 2011 at 12:20pm by
Becket Adams
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Sears Holdings Corp. plans to close between 100 and 120 Sears and Kmart stores to raise cash after a weak holiday shopping season for the retailer.
The closings fueled speculation about whether the 125-year-old retailer can turn itself around.
The closings are the latest and most visible in a long series of moves to try to fix a company that has struggled with falling sales and shabby stores as rivals like Wal-Mart Stores Inc. and Target Corp. spruced up their looks and turned into one-stop shopping sources.
“There’s no reason to go to Sears,” said New York-based independent retail analyst Brian Sozzi, “It offers a depressing shopping experience and uncompetitive prices.”
Billionaire investor Edward Lampert purchased Kmart out of bankruptcy in 2003 and bought Sears, Roebuck & Co. a year later. Since 2004 Sears Holdings – which operates both Kmart and Sears stores – has watched its cash and short-term investments go from about $2.09 billion for the year ended Jan. 31, 2004 to $1.34 billion for the year ended Jan. 31, 2011, according to FactSet. The figure now stands at about $700 million.
Credit Suisse analyst Gary Balter says the softer-than-expected holiday sales performance point to “deepening problems at this struggling chain and renewed worries about Sears survivability.”
Balter added that Sears’ weakening performance may lead its vendors to start to worry about their exposure. If vendors stop shipping to a retailer or start insisting on cash up front, it can spell the end.
That company disputes talk that it is in trouble financially or will have problems surviving. Spokesman Chris Brathwaite says Sears Holdings has more than $3.5 billion of liquidity, consisting of $700 million in cash and $2.9 billion available under its credit lines.
Still, Sears Holdings said its declining sales, ongoing pressure on profit margins and rising expenses pulled its adjusted earnings lower.
Some industry experts say part of the problem Sears is facing is that economic difficulties continue to grip its core customers. These middle-income shoppers have seen their wages fail to keep up with higher costs for household basics like food.
But the bigger issue, analysts say, is that Sears hasn’t invested in remodeling, leaving its stores uninviting.
A hint that trouble might be brewing came in mid-December when Sears Holdings unexpectedly announced that 260 of its Sears, Roebuck and Co. locations would stay open until midnight through Dec. 23.
In an internal memo Tuesday to employees, CEO and President Lou D’Ambrosio said that the retailer had not “generated the results we were seeking during the holiday.”
Like Sozzi, Balter believes the shopping experience is hurting Sears’ performance.
“The extent of the (sales) weakness may be larger than expected but the reasons behind it are not. It begins and some would argue ends with Sears’ reluctance to invest in stores and service,” Balter said.
The company said that the store closings will generate $140 to $170 million in cash from inventory sales. It expects the sale or sublease of real estate holdings to add more cash.
Aside from the planned store closings, Sears is altering the way it handles stores that are not performing as well as others. The company says it will no longer prop up marginally performing stores in hopes of improving their performance and will now concentrate on cash-generating stores.
Sears Holdings said it also plans to lower its fixed costs by $100 million to $200 million and trim its 2012 peak domestic inventory by $300 million from 2011′s $10.2 billion at the third quarter’s end.
The Associated Press contributed to this report.
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Comments (91)
KeithOlberdink
Posted on December 27, 2011 at 5:19pmHere’s an idea! Unionize with the SEIU or UAW and daddy Obamao will throw you a couple hundred billion. Don’t worry! No need to pay it back. John Cue Six Pack (who typically votes republican) will pick up the tab.
Report Post »jzs
Posted on December 27, 2011 at 11:01pmWho shops at K-Mart and Sears? The the middle class and lower middle class. Sorry K-Mart and Sears, they’re broke. There’s not enough discretionary income to for them to buy from your stores.
But according to the right, if we give the owners of K-Mart and Sears a tax break, they will create jobs and hire more people.
Sorry, I don’t think so. These companies are closing stores, not because the owners aren’t rich enough (they’re plenty rich), but because the poor slobs, like you and me, don’t have the money to shop there. So much for Reagonomics.
Report Post »Bill Burns
Posted on December 28, 2011 at 11:25amJZS I’ve never seen you be right or even informed on any subject – Your dubious record remains intact.
Report Post »frank
Posted on December 27, 2011 at 5:16pmThey will be closing the one near to the hoods. Because flash mobs are coming near you.
Report Post »V-MAN MACE
Posted on December 27, 2011 at 6:52pmThose are already closing. You haven’t heard of the corporate real estate bubble?
Oh yea, it’s coming DOWN. I remember when the malls started closing because the cops started running all the Urban Youths out of the mall who were spending their money (billions of dollars per year) and seeking of-age suburban daughters. The self-segregated suburban people who frequented malls were angry that their police state heroes couldn’t keep them separate and secure from the Abominable Urban Minority, so they stopped spending their money at malls too. Then the internet shopping thing hit the scene and those businesses took even more hits.
So we now have gigantic, empty corporate real estate that will be converted into ad-hoc FEMA Camps during the collapse.
Isn’t the Federal Reserve and the Police State GRAND?!??!
Report Post »texasfireguy
Posted on December 27, 2011 at 8:16pmIs there anything that you don’t see a conspiracy in?
Report Post »Grey Eagle
Posted on December 27, 2011 at 8:39pmI like Sears Appliances and they have the best warranty available in my book.
Report Post »V-MAN MACE
Posted on December 28, 2011 at 11:14amI have the capability of higher thought, facilitated by abstract logical processes.
I make connections from observations that may not be readily apparent to average people.
Report Post »texasfireguy
Posted on December 28, 2011 at 3:24pmOtherwise known as crazy.
Report Post »V-MAN MACE
Posted on December 28, 2011 at 5:22pmOtherwise known as smarter than you.
Go take another long drink of that tap water, you fluoridehead.
Report Post »V-MAN MACE
Posted on December 28, 2011 at 5:24pmTexasFireguy
Don’t you have some timecards to forge and some taxpayer dollars to steal?
Your little snide remarks doesn’t illustrate your brightness. Why don’t you try actually debating the points I made, or are you a COWARD doing your little driveby trolling?
Report Post »texasfireguy
Posted on December 28, 2011 at 7:14pmSorry it took so long to respond. I was at a union meeting where we sit around and laugh about how much taxpayer dollars we are stealing.
Report Post »You don’t make any points, how could anyone debate you? You post paranoid fantasies as facts and then ridicule and insult anyone that doesn’t 100% agree with you. If youhad rational arguments or points, then we might have a rational discussion. But you don’t, so we won’t.
southernORcobra
Posted on December 27, 2011 at 5:14pmWork as a janitor at a kmart. So I’d lose my job too but yeah remodel is not a word that managment uses. Neither is repair. When it rains or snows we have so much water coming through the roof even Noah would say “Damn thats alot of water”
Report Post »bullcrapbuster
Posted on December 27, 2011 at 5:01pmNot big enough for a bailout?
Report Post »GodsDotr
Posted on December 27, 2011 at 4:51pmThe federal government‘s message that the economy is improving is akin to Mao’s Great Leap Forward. People were starving, but they all kept telling themselves that they were producing more food and insanely large crops than ever. Wake up, America! Your standard of living is dropping to enable other countries to gain more wealth and power over you.
Report Post »TOMMYSURIA
Posted on December 27, 2011 at 4:51pmAmazing how 2 dinosaurs merge together to die together….
Report Post »RetailGenius
Posted on December 27, 2011 at 4:45pmThere is really nothing new in the past 156 years that counts. Sears/Kmart has a lacklustre inventory assortment, lack of many advertised items in store, just in time inventory fulfilment should be renamed Just 90 Days Away, poor customer service, a lack of product knowledgeable associates, a complete lack of a customer concentric environment, aging and poorly maintained stores, clutter, dismal when it comes to trending merchandise, compete failure at being competitive, customer irritation and irrelevant promotional programs, failure to grasp how the consumer perceives, failure to identify with customer base, failure to focus on the core functions of the retail process, failure to clearly define customer service standards and goals where it counts (the lowest, yet front line levels) and rehashing programs that never worked the first times around decades ago. The solutions are not that difficult when they are actually made THE priority, but the Sears management team just can not resist the temptation to inject irrelevant and adverse corporate crapola into the basic concepts that bring customers back. I wish I could say that it isn’t too late, but before you can fix anything you have to have a team that gets it. The Sears Holdings crew just doesn’t.
Report Post »Grapeknutz
Posted on December 27, 2011 at 5:36pmThe “crew” as you put it is very under payed, in fact I know some sales associates that receive food stamps or assistance of some sort. Sales associates make only 1.50 to 2.00% commission on items they sell. most people cant live on that. You will see only retirees and college kids work there for beer money and SSI supplement boost for seniors that work there. This is why some associates dont care much about customers and Sears.
Report Post »dnewton
Posted on December 27, 2011 at 6:13pmI think you forgot to mention that some stores lost the luster of their location over time as the city aged. Put another way, it became safer to shop elsewhere.
Report Post »joelack55
Posted on December 27, 2011 at 7:16pmeverybody is underpaid …except teachers, government workers,and attorneys
Report Post »EricCT
Posted on December 27, 2011 at 11:46pmFifteen years ago, I had a Sears card. Built up a $7,500 balance, for which they were charging me nearly 25% interest. I asked them to reduce the interest rate, but they refused. So I saved, worked the balance down to zero, and got rid of the card. Sears response was to try to send me new cards every couple of months with a low teaser rate. I had to call them to explain nicely that I didn’t intend to shop there again, it didn’t make sense to have a store card. To me, this is a poorly managed company, with questionable ethics – one that rips off its customers and employees rather than building genuine loyalty. Those kind of problems, they originate from the top executives and the board of directors.
Report Post »gpk
Posted on December 27, 2011 at 4:41pmDamn like to have a dollar for every mile I put on my J.C. Higgins 3 speed bike in the 1950′s.
Report Post »AJAYW
Posted on December 27, 2011 at 5:28pmGPK
I still have my first J.C. Higgins shot gun from sears. However in 1982 I was in a meeting with several of their managers they were talking about their goal. I never been in a store after that meeting.
Report Post »loveliberty83
Posted on December 27, 2011 at 4:29pmpoor customer service employees not knowledgeable
Report Post »Grapeknutz
Posted on December 27, 2011 at 5:07pmNot really, its the hounding customers for credit apps and shop you way rewards that really turn off customers, along with UNCOMPETITIVE prices, and and the sales associates being under the gun to increase profits beyond the sales, such as service contracts.
Report Post »loveliberty83
Posted on December 27, 2011 at 4:28pmI stopped shopping @ kmark because of the rudeness of employees when they combined Sears loss , they must have hired kmarkpersonnel, i do not shop Walmart in our town because of the rude workers years ago you loss your job today they do not fire them
Report Post »john9300
Posted on December 27, 2011 at 4:26pmI can remember when Sears was one of the largest gun dealers in the country, Run out of business by government red tape as have so many businesses. I still have an old J. C. Higgins 12 ga shot gun that I bought from Sears in 1965… And yes it still shoots great..
Report Post »hamline66
Posted on December 27, 2011 at 4:25pmAnd the economy continues it’s miracle comeback—-whoopee another company and more jobs disappear but everything is getting better just ask His Majesty and you will be reassured. Will the American people ever wake up to ALL the great lies that OBAMA has told them ? Probably not, they are after all the public that wants to recieve reward without work or effort !
Report Post »paying-for-freedom
Posted on December 27, 2011 at 4:25pmHope the stores or at least the craftsman brand survives in some form or another. Craftsman is the best, still got a drill from the 1950′s and it works and looks great. Of course back then there was no reverse switch but still a great drill, all metal, no plastic.
Report Post »S.D.BORN
Posted on December 27, 2011 at 4:56pmSears needs to dump K-mart and stick with what they’re good at – tools and appliances.
Report Post »Grapeknutz
Posted on December 27, 2011 at 5:09pmSD its the other way around Kmart owns Sears.
Report Post »deerjerkydave
Posted on December 27, 2011 at 4:10pmAnother Obama success story. First it was Circuit City, and then it was GM, and then it was Chrysler, and then it was Best Buy,and then it was Lowes, and then it is KMart, and then it is Sears…..
Report Post »saranda
Posted on December 27, 2011 at 5:00pmAnother stupid GB listener. Circuit City went bankrupt in Nov. 2008 under W’s presidency. GM in June 2009 and Chrysler in April 2009….not sure Obama in the 3 to 5 months in office caused these. Best Buy and Lowes are still around and no bankruptcy with either. What is wrong with you?
Report Post »kcares
Posted on December 28, 2011 at 8:55amI live close to Nashville, and the big Sears in close to downtown Nashville. Noone is going to drive to downtown Nashville to shop. I am also seeing so many small businesses closing. O is destroying this country and the people that live in it. Just heard that the shooting in Tx. made to look like a crazy husband, was a honor killing. His daughter was dating a Christian. This country is being taken over and not be Christians that just want to work and earn a living.
Report Post »Rodster
Posted on December 27, 2011 at 3:54pmI quit shopping at Kmart along time ago. I don’t want to see anyone on the unemployment line but Kmart has terrible service, their stores look like they were frozen in time back to the 70′s. Every now and then I give them a chance and try and buy something and inevitably I walk out because there’s only 1 or 2 cashiers and 7-8 people waiting in each line.
Report Post »dae26
Posted on December 27, 2011 at 4:33pmI agree with everything you say. I have to add though that one of the other reasons I leave disappointed is because their prices are horrible. I know I can get most if not all the items they sell for cheaper at Target or Wal-Mart.
Report Post »kung
Posted on December 27, 2011 at 4:51pmYou’re exactly right. Amazon is my first-stop shopping destination now. Their prices are competitive and shipping is superb, and customer reviews help inform purchase decisions. For apparel, one of the few categories I don’t buy online, I avoid both K-Mart and Wal-Mart as their products are low quality.
Report Post »Caerus
Posted on December 27, 2011 at 8:42pmI’ve never actually seen 7-8 people at our local K-Mart at one time. It is basically empty, but for the employees.
Report Post »FirstGenerationPatriot
Posted on December 27, 2011 at 3:45pmI have fond memories of shopping at Sears with my family when I was a kid. It was a great store with great products. I have noticed a major decline around 04′ and its gone downhill since. I live in Ft. Myers FL. and the only reason I go to Sears now is for the great watch & jewelry repair they have there. The only reason the watch & jewelery repair dept is great is because it is a family owned concession and separate from the b.s. of Sears management.
Report Post »Cavy from VA
Posted on December 27, 2011 at 3:36pmNeedless to say … In my over 30 years of retail experience … IT ALL COMES FROM THE TOP!!! … If the CEO is an ass then all the folks down the line will be asses … If store management is “lifeless” then the employees will mimic what they see and be “lifeless” too! It’s like driving the damn bus in the ditch … it’s always the drivers fault!
Report Post »Seabass82
Posted on December 27, 2011 at 7:06pmcouldn’t agree more!!
Report Post »valleyfever
Posted on December 27, 2011 at 3:22pmYears ago, I used to buy everything at Sears because they had good products, good selection, and great customer service. Had a problem with a tire warranty adjustment and started shopping elsewhere. There are too many retail outlets available to consumers. When service suffers customers hit the road.
Report Post »Dudydoo
Posted on December 27, 2011 at 3:20pmToo bad, I like Sears….Kmart on the other hand, who cares.
Report Post »Gary Fishaholic
Posted on December 27, 2011 at 4:09pmI am with you on that one.
Report Post »IMPEACHBHO
Posted on December 27, 2011 at 3:10pmThey should make a separate company, say something like Sears of Craftsman. All tools, nothing but the tools.
Report Post »Browncoat359
Posted on December 27, 2011 at 3:46pmThey already have Sears Hardware stores. Stand-alone stores that focus on hardware and appliances. I dunno if any of those will be affected by these planned closures.
Report Post »Grapeknutz
Posted on December 27, 2011 at 5:54pmThose stores are privately owned stores that sell appliances Lawn and garden and tools, under the Sears name.
Report Post »BurntHills
Posted on December 27, 2011 at 3:09pmwonder what soros has against the all-American tradition: Sears.
Report Post »SlyBriFry
Posted on December 27, 2011 at 3:03pmToo early to sing Ding Dong, the witch is dead? OK… I’ll wait.
Used to work for them…. grrrrr.
Report Post »stefiscool
Posted on December 27, 2011 at 4:38pmThey were my illustration of the entitlement culture of my generation. Five years of retail experience, 3 years of office experience, and a 3.85 college GPA, and I still accepted a position there at minimum wage, because at least it was a job. Now, there was a complete lack of air conditioning, the decor hadn’t change since probably before I was born, things were breaking all over the place, and my schedule changed day-to-day, but it was a job nonetheless
Report Post »Detroit paperboy
Posted on December 27, 2011 at 2:59pmCould not tell you the last time i was in a sears or kmart….. Nuf said.
Report Post »Partyof1
Posted on December 27, 2011 at 2:57pmI wish some like The Blaze would investigate the “Hobby Lobby” management for the way they will all of a sudden go into a district and fire managers and co-managers. It also extends upward to district managers on occasion. They close on Sunday to project a Christian image but sure don’t live up to it with their employees.
Report Post »drphil69
Posted on December 27, 2011 at 3:15pmNot sure about where you live, but in my state Sears and Kmart are open on Sundays.
If what you say is true, Sears will be out of business soon. Or maybe Obummer will declare them “too big to fail..”
Report Post »rfycom
Posted on December 27, 2011 at 2:50pmI hate to see anyone lose their job, but it is the shopping experience. The stores are dull and lifeless. The people are zombie like. I only go to Sears for tools that is it. Fix it!!
Report Post »VTDave
Posted on December 27, 2011 at 3:17pmTools are the only draw for me as well.
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