Hoffman Estates, Ill. — In its first-quarter results released today, Sears Holdings Corp. says that it has identified approximately 100 non-profitable stores, 72 of which will begin store-closing sales in the near future.
The Hoffman Estates-based retailer had already announced plans to close 103 Kmart and Sears stores nationwide at the beginning of this year.
Sears says the closings are part of ongoing efforts to streamline the company’s operations and focus on its best stores. After the 72 store closings, Sears will have 822 Kmart and Sears stores in operation. A full list of store closures can be found here.
Sears reported a net loss of $424 million for the first quarter of 2018. This compares to $245 million reported for the first quarter of 2017, which included a gain of $492 million from the sale of the Craftsman brand.
Sears generated total revenues of approximately $2.9 billion during the first quarter of 2018, compared with $4.2 billion this time last year, with store closures contributing to nearly two-thirds of the decline.
“In a challenging quarter, we continued to focus on our strategic transformation, identifying additional opportunities to streamline operations and adjust inventory and operating expenses,” says Edward Lampert, chairman and CEO of Sears Holdings.
Lampert adds that Sears will continue to explore opportunities to unlock the full potential of its assets for shareholders, such as third-party partnerships and small-format stores that blend brick-and-mortar locations with online experiences.
Beyond e-commerce, a multitude of factors including shifting shopping patterns and habits by an ever-changing consumer base have contributed to hurting Sears store sales, says Rick Scardino, a principal with the Chicago office of Lee & Associates.
Jeff Green, partner with Hoffman Strategy Group, says that e-commerce is not at all the biggest reason for the retailer’s struggle. “Its merchandise, service and prices have not resonated with the consumer in at least a decade,” he says.
The shuttering of big box retail space does present opportunity for landlords to bring in new tenants and redevelop spaces, particularly with entertainment, restaurants or fitness occupants.
“Sears has had wonderful real estate for decades, so most of it will be backfilled in the years to come,” says Scardino. But he is also quick to point out that with recent Toys ‘R’ Us and Carson’s store closures, there are plenty of large spaces vacant and available.
Green expects to see Sears close even more stores. “Sales at Sears and Kmart locations are dismal, at best,” he explains. “Sears is really a real estate company. Its value is in its land and the building on which it sits, not the operating business.”
— Kristin Hiller