HOFFMAN ESTATES, IL-Just two weeks after the state agreed to extend a $15 million tax break to keep Sears Holding Corp. headquartered in Illinois, the company announced that poor holiday sales are forcing store closures. The retailer said in a statement today that it will close between 100 to 120 Sears and Kmart stores, though no locations have been announced yet.
The company, which has more than 4,000 outlets throughout the United States and Canada, says its comparable store sales have dropped 2.6% for the year, and 5.2% just in the past eight weeks. Company officials blamed decreased sales in electronics at Sears and apparel at Kmart for the lower numbers.
Lou D’Ambrosio, CEO, said in the statement that the company will implement the store closings and savings measures to reduce ongoing expenses, adjust the asset base and improve the firm’s business model. “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,” he said.
Sears also said that it will no longer try to shore up underperforming stores, and will “act opportunistically to recognize value from poor performing stores as circumstances allow,” according to the statement. “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. We intend to accentuate our focus and resources to our better performing stores with the goal of converting their customer experience into a world-class integrated retail experience.”
The announced store closures will save the firm up to $170 million as the net inventory is sold and the properties are disposed or leased, the company said. “We currently expect the store closure and inventory reduction actions to reduce peak inventory in 2012 by $500 million to $580 million and reduce our peak borrowing need by $300 million to $350 million in 2012 from levels that may have resulted in 2012 without such actions,” according to the statement.
A final determination of the stores has not been made. A Sears spokeswoman refused to comment further on the closings.
Illinois Gov. Pat Quinn just signed a law authorizing a $150 million tax cut for the retailer, at $15 million a year for 10 years, to keep the chain from moving its headquarters to another state. Sears said after the signing that it will stay at its complex in Hoffman Estates, where the firm absorbed the Kmart retail chain in 2005. The company has suffered as Walmart and Target have dominated the discount store market.
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