Sears, the one-time American retail giant, said on Thursday, May 31, it plans to shutter another 72 locations to stem losses in the face of deepening financial distress and reported a nearly 12 percent drop in quarterly comparable-store sales.
The department store operator has been trying to transform its business as foot traffic at brick-and-mortar stores declines and online shopping gains popularity. Its chief executive, billionaire Eddie Lampert, has said the company should sell its well-known appliance brand Kenmore, home improvement businesses and real estate, and that his hedge fund ESL Investments Inc would bid for them.
“We continue to evaluate our network of stores, which are a critical component in our transformation, and will make further adjustments as needed and as warranted,” Sears said in a statement announcing its first-quarter results, CNBC reported.
Such a deal would infuse the debt-laden company, which also runs Kmart discount stores, with at least $500 million cash, helping it remain in business. The company last year said there were doubts about its ability to continue as a going concern.
To stem losses, Sears has closed nearly 400 stores since last year, leaving 894 stores still open as of May 5.
“While we had a challenging first quarter, we remain focused on improving our financial performance and enhancing our liquidity,” Lampert said in a prepared statement.
He also told CNBC: “We’re not liquidating just to liquidate. We’re liquidating … to get capital to put into our pension plan. As opposed to erring on the side of, ‘This store might work.’ … If it’s not working, we’ve invested the time, so we’ve got to close it because we are now jeopardizing this [store] over here.”
Sears shares, which have lost nearly all of their value in the last five years, were down almost 10 percent at $2.90 in mid-day trading. Lampert and his hedge fund own nearly half of the shares.
“As we’ve stated before, our top priority is to return to profitability,” Rob Riecker, the company’s chief financial officer, said Thursday, according to The Washington Post. “This is an ongoing process, and there is still more work to be done.”
The Washington Post reported that there will now be 820 Sears and Kmart stores, down from 2,000 five years ago.
“The demise of Sears has felt like a prolonged drip, drip, drip,” said Mark Hamrick, who works as an analyst for Bankrate.com, according to the Post. “By diminishing the quality of the in-store experience, Sears has basically trained consumers to avoid going inside.”
Analysts said that the firm is basically on life-support now.
“This company is on life support,” said Sucharita Kodali, who works as a retail analyst for Forrester, as quoted as saying by the newspaper. “I don’t think anyone—whether a competitor, supplier or landlord—thinks otherwise. It will not be a shock to anyone when it finally does shut down.”
A full list of the closures can be viewed here (pdf).
Reuters contributed to this report.