Sears Holdings Corp. has announced that more closings are on the way, after shuttering nearly 400 stores over the past year due to poor sales.
Reporting dismal first-quarter earnings, the department store chain added that it has identified around 100 unprofitable stores and made the decision to close 72 of them by the end of the third quarter, including those under the Kmart banner, Chief Financial Officer Rob Riecker said in a conference call Thursday.
Although a spokesperson couldn’t confirm the number of store associates who will be impacted, eligible associates will receive severance pay and opportunities to transfer to other Sears or Kmart locations.
“Moving forward, we will continue to focus on our best stores, which remain a critical component of our transformation strategy as we shift to a member-centric integrated retail model,” Riecker added. “To best meet our members’ evolving needs and to drive profitability, we will need to continue to right-size our store base and focus on our best stores, including our new smaller-store formats.”
Liquidation sales will start on June 14 at 48 Sears stores and 15 Kmart stores, all of which will be shuttered. Closing dates are still being evaluated for another nine stores.
The closings mark the latest move in the company’s bid to stay afloat, which saw a glimmer of hope last month when CEO Eddie Lampert offered to purchase the struggling retailer’s real estate through his hedge fund, ESL Investments Inc., in order to salvage his retail enterprise.
Shareholders are now banking on Sears’ potential tire service partnership with Amazon and the long-term extension of its credit card rewards deal with Citi Retail Services to keep the company running.
Sears hasn’t turned a profit since 2010, which can be attributed to a sharp decline in brick-and-mortar foot traffic and growing online competition. For the quarter ended May 5, it reported a $424 million loss (or a $3.93 loss per diluted share), with sales at $2.9 billion compared with $4.2 billion during the previous year.
Store closures contributed to nearly two-thirds of the decline as same-store sales declined on average 11.9 percent during the quarter, including a 13.4 percent drop for Sears and 9.5 percent decrease for Kmart. Although total comparable store sales declined, the company saw promise in categories including footwear, apparel and jewelry.