HOFFMAN ESTATES, Ill.—Sears Holdings announced that it would close between 100 and 120 Sears and Kmart stores amid falling same-store sales and a projected decline in fourth quarter earnings.
CEO Lou D’Ambrosio commented in a statement, “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, adjust our asset base, and accelerate the transformation of our business model.”
Those actions include the store closures, which Sears Holdings says will “generate $140 to $170 million” in cash from the sale of inventory. More cash will be raised once the properties are sold or leased. Sears has not yet chosen the stores to be closed.
Same-store sales for the fourth quarter were down 4.4 percent at Kmart stores and 6 percent at Sears stores. Apparel sales were down at Kmart, as were electronics and layaway, and apparel sales at Sears were flat. Apparel at Sears Holdings’ Lands End business at Sears stores was up mid-single digits, however.
The company will report Q4 and full-year earnings in February, but says in the meantime, “The combination of lower sales and continued margin pressure coupled with expense increases has led to a decline in our adjusted EBITDA. Accordingly, we expect that our fourth quarter consolidated adjusted EBITDA will be less than half of last year’s amount.”
Last year’s Q4 adjusted EBITDA was $933 million, $138 million of which was from Sears Canada.
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