Sears, the embattled retailer, is gearing up to close eight of its brick-and-mortar department stores and 35 Kmart stores in an effort to slash costs and square footage and return to a profit, reported Reuters.
Citing Sears Chief Executive Eddie Lampert, Reuters reported the latest store closings are on top of the 150 brick-and-mortar stores that Sears announced in January would be shuttering. The moves come amid years of losses and a steep decline in sales, thanks largest to the rise of eCommerce and Amazon. In February it announced it was aiming to reduce costs in 2017 by $1 billion or more, noted Reuters.
“This is part of a strategy both to address losses from unprofitable stores and to reduce the square footage of other stores because many of them are simply too big for our current needs,” Lampert wrote in a blog post covered by Reuters. A Sears spokesman wouldn’t disclose how many job losses would result from the latest actions. Sears said employees who are eligible would get severance and be able to apply for open jobs at other Sears or Kmart stores. Sears is focusing on smaller-format stores at the same time it is reducing the number of stores that aren’t competitive. “We reached the point in the past 12 months where some of our vendors have reduced their support, thereby placing additional pressure on our business,” Lampert said.
In an updated blog, Lampert noted that in addition to closing more stores the company amended its second lien credit facility to provide up to $500 million in additional borrowing capacity and had sold more than $200 million in real estate, which helped the company pay down a portion of a real estate loan. Lampert’s hedge fund, ESL Investments Inc., controls one of the entities that has lent money under the facility, reported Reuters, noting the hedge fund may take part in the facility as a lender.