Sears Holdings announced yesterday that it will close an additional 68 Kmarts and 10 Sears over the next few months “to accelerate its transformation and its return to profitability.” That’s on top of 50 stores it announced it was closing in February.
In a release that lists the affected locations across 27 states, the Hoffman Estates, Ill.-based company says it “expects the store closures to generate a meaningful level of cash from the liquidation of store inventory and from the sale or sublease of some of the related real estate.”
That, along with $1.2 billion in debt financing it raised earlier, will allow it “execute its transformation,” “meet its financial obligations,” and move towards restoring profitability in 2016.
In the wake of 11 straight years of comparable sales declines, “the closings will leave Sears with fewer than 700 department stores, compared to 860 in 2008, while Kmart’s store count will below 900, compared to almost 1,400 that same year,” reportsFortune’s Phil Wahba.
Shares were up 6% on the news in after-hours trading, CNNMoney reports. “Sears stock has been in a downward spiral for some time, sinking 37% in 2015 due to meager sales. Shares are down another 12.4% so far this year. It hasn't been profitable since 2012,” writes Jackie Wattles.
Sears Holdings chairman and CEO Edward S. Lampert bought Kmart out of bankruptcy in 2003. Kmart then bought Sears in an $11.5 billion deal announced in late 2004 that closed the following year. At the time, CNNMoney’s Parija Bhatnagar called it a “deal that will marry two of the nation's oldest retailers that had trouble keeping up with the changes in American culture around them.”
Tying the knot has not been a blissful experience for either, however. Both retailers “have struggled to keep pace with their respective competitors — in Sears’ case, the brand has been faulted for not upgrading its stores or improving its merchandise to keep pace with everyone from J.C. Penney to Home Depot,” Wahba writes, “while Kmart, bigger than Walmart only 25 years ago, has been left behind by nimbler discounters.”
In a sign of the times, the fact that the Sears and Kmart locations in Battle Creek, Mich., were not closing made news.
Lampert said impacted employees will receive severance and can apply for open positions at other Kmart or Sears stores. And he also trotted out his transformation bullet points.
“Sears Holdings will continue to transform as the role of the store evolves to fit the way that members want to shop,” Lampert said. “Through our continued investments in Integrated Retail, our stores are a critical component of our strategy as we provide our members with industry-leading innovations such as Meet with an Expert, In-Vehicle Pickup and Return and Exchange in Five.”
Bloomberg’s Shelly Banjo said Lampert was “all talk, no action,” in a searing (pun intended) “Gadfly” commentary in February.
“Lampert has written about 63,000 words' worth of shareholder letters since 2005, when he took over what was once America's biggest retailer and began writing annually about what he calls Sears’ transformation,” she wrote. “… But it's that first shareholder letter he wrote that I'd remind Lampert of today. He closed it with a line that began: ‘Of course, the proof is in the performance.’”
Meanwhile, Martha Stewart told an audience in Detroit yesterday that she should have bought Kmart back in the day. She had “considered making a visit to the former and now-vacant Kmart headquarters on Big Beaver Road in Troy, a building she first saw during the 1980s when she signed her first corporate partnership with the retailer,” JC Reindl tells us in the Detroit Free Press.
“Sadly, of course, they are no longer here,” Stewart told 1,300 people at Fuel Detroit, a one-day leadership and business conference. “We thought about buying it … but I didn't buy it. I should have. And so that's one of the regrets, not buying Kmart.”
It’s easier to be reckless about what you wish for when you’re doing it in retrospect.