Sears announced it will be closing between 100 and 120 Sears and Kmart stores soon due to poor holiday sales. An internal memo sent out by CEO and President Lou D'Ambrosio said that stores hadn't generated the results we were seeking during the holiday, according to The Associated Press.
Sears will be closing stores that are marginally performing, and will be looking to support only the stores that are generating money, the company said.
These actions will better enable us to focus our investments on serving our customers, D'Ambrosio said in the memo.
The stores, which reported a profit of $933 million in the fourth quarter last year, are expecting to report less than half of that for this quarter, which includes the all-important holiday season.
Kmart experienced a 4.4 percent drop in revenue, which was blamed on a drop in sales of clothes and electronics, along with a lack of layaway sales. Other stores, such as Wal-Mart and Toys R Us, however, saw a sales gain in those same areas.
Sears drop in revenue was similar, their 6 percent loss being blamed on a decline in home appliance and electronics sales. And while the economy isn't helping, one analyst said that when consumers do go shopping, they have no reason to go to Sears or Kmart.
There's no reason to go to Sears, Brian Sozzi, an independent retail analyst, told the Associated Press. It offers a depressing shopping experience and uncompetitive prices.
By closing the 100 to 120 stores, Sears and Kmart hope to generate upwards of $150 million through inventory and real estate sales. In addition, they are planning to trim their budget by over $100 million. That may not, however, be enough.
Gary Balter, an analyst at Credit Suisse, told the Associated Press that the drop in sales points to deepening problems at this struggling chain and renewed worries about Sears survivability.
Sears has not announced which of its more than 4,000 stores they will be closing, nor have they announced how many jobs, if any, will be lost. D'Ambrosio, however, said in the memo that he is not worried about the company's future.
We will bounce back and become stronger than ever, he said.