Sears Closing More Stores as Sales Shrink For 26th Quarter in a Row

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 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 [e-mail] and Allison Prang at [e-mail]

(END) Dow Jones Newswires

May 31, 2018 07:13 ET (11:13 GMT)

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