Hoffman Estates, IL—Plagued by continued difficulties in returning its stores to profitability, Sears Holdings said today that its holiday sales lagged from last year and that it plans to close some 100 to 120 stores. The company didn’t reveal yet which stores would be closed.
The company said its holiday sales were down from last year, mostly due to declines in its electronics and hard goods business.
For the eight weeks ended Christmas Day, Sears Holdings said its comparable store sales were down 5.2% compared to the same period 2010. Its Kmart stores had a 4.4% drop in comparable store sales due mostly to fewer layaway sales, and lower sales in apparel and consumer electronics. Sears U.S. comparable store sales were down 6% driven by consumer electronics and home appliance categories.
“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,” said Lou D’Ambrosio, Sears Holdings’ ceo.
Borrowing Rises to $485 Million
The company will also cut its inventory at its remaining 4,000 stores in the United States by $300 million as a cost-cutting measure. The company estimates the closings will generate between $140 million to $170 million in cash as the inventory of the closed stores is sold off, along with additional cash generated by the sale or sublease of real estate.
Futhermore, the company signaled that more closing may be ahead for underperforming stores.
“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,” said D’Ambrosio.
Sears also said it tapped its credit facility, with $483 million in borrowing outstanding as of December 23, compared to zero a year earlier, and said it expected smaller fourthquarter earnings which would be released in February 2012.
“It’s about time,” said retail analyst Brian Sozzi, who said he believes additional store closings may be necessary. “They’ve neglected this business for so long.”