Sears Closing More Stores as Sales Shrink For 26th Quarter in a Row -- Update
May 31 2018 - 8:25AM
Dow Jones News
By Suzanne Kapner and Allison Prang
Sears Holdings Corp. said Thursday that it plans to close
another 72 stores it has deemed unprofitable, as the company
continues to struggle with falling sales.
Sears has been closing hundreds of stores in recent years,
selling brands and spinning off divisions to stay afloat as losses
have mounted and as it struggles to keep its customers away from
Walmart Inc., Amazon.com Inc. and other outlets.
The company said a list of the 72 stores would be posted later
Thursday.
The new round of store closures comes as the retailer reported
sales fell in the latest quarter, extending a streak of declines
that stretches back more than six years at the once dominant
retailer.
The last time Sears's sales increased from the previous year was
in the third quarter of 2011, when the company had $9.4 billion in
revenue, according to data from Thomson Reuters.
In the latest quarter, total merchandise sales fell 34% to $2.2
billion. Total revenue, which includes money generated from
appliance and product-repair services, fell 31% to $2.89
billion.
Same-store sales at Sears locations fell 13.4%, while they
declined 9.5% at Kmart locations. The company operated 894 total
locations as of May 5, down from 1,275 as of around the same time
the year prior.
Sears reported a first-quarter net loss of $424 million, or
$3.93 a share, compared with a profit of $245 million, or $2.29 a
share, a year earlier. The prior-year quarter's results got a $741
million lift from asset sales. In the latest period, Sears recorded
a $165 million benefit.
Sears is currently weighing whether to divest its Kenmore
appliance brand and other units. The moves follow prodding by Sears
Chief Executive Edward Lampert, who has proposed that his hedge
fund purchase the assets if the company is unable to find other
buyers.
Mr. Lampert, who is also Sears's biggest investor and among its
biggest lenders, said in an April letter to the Sears board that
his ESL Investments Inc., which owns a controlling stake in the
retailer, is willing to submit offers for Kenmore, the Sears Home
Improvement and Parts Direct businesses as well as some real
estate, including $1.2 billion in debt secured by the
properties.
Sears has hired advisers and said earlier this month that it
initiated a formal sale process. On Tuesday, ESL, in another letter
to the Sears board, said it had "received numerous inbound
inquiries from potential partners," and has requested permission
from the special committee of the board to engage with such
partners in order "to put forward a definitive proposal."
Investors, suppliers and landlords have grown increasingly
concerned about the company's future, forcing Sears to pay cash up
front for many goods and ESL to regularly extend the company
credit. Sears' Canadian arm filed for protection from creditors
last year and decided to liquidate. Sears spun off most of its
stake in Sears Canada in recent years, but retained a 12%
stake.
The company's shares, which more than a decade ago traded above
$100, now languish at around $3. Sears shares fell 3.4% premarket
trading Thursday.
Last year, Sears struck a deal to sell Kenmore products on
Amazon.com Inc., broadening its reach beyond Sears and Kmart
stores. It also began selling its DieHard batteries on Amazon. In
2017, it sold its Craftsman brand to Stanley Black & Decker
Inc., which is expanding distribution of the tools, lawn and garden
equipment to other retailers.
Mr. Lampert's interest in purchasing Kenmore and the other
businesses extends a string of transactions in which he is often on
both sides. In addition to serving as Sears's chairman and CEO, he
is also chairman of, and a major investor in, Seritage, which ranks
among Sears's biggest landlords.
Theo Francis contributed to this article.
Write to Suzanne Kapner at Suzanne.Kapner@wsj.com and Allison
Prang at allison.prang@wsj.com
(END) Dow Jones Newswires
May 31, 2018 08:10 ET (12:10 GMT)
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