Christmas is right around the corner, and for most consumers the mall is the number one place to go for holiday shopping. However, some of you may be sadden by the disappearance of one of your favourite department stores.
Struggling retail company Sears Holdings Corporation is in the process of closing down over 100 store locations in the U.S. Since February, Sears has shut the doors of 96 stores. Now the company plans to include an additional 116 stores on the list, including the closure of 31 Sears Auto Centers, 55 Kmart departments, and 30 Sears retail stores.
"As we stated in our (second quarter earnings report), we disclosed that we would be closing unprofitable stores as leases expire and in some cases will accelerate closings when it is economically prudent,” Sears spokesman Howard Riefs said in an email.
Sears has seen its profits plummet within the past year. After making the decision to terminate the operation of failing departments, Sears Holdings was left with over 1,000 Kmart stores and nearly 800 Sears stores.
As a result, Sears Holdings has lost $1 billion in 2014. In hopes to revive dwindling profits, Sears Holdings has devised a plan that would raise nearly $625 million through equity warrants and unsecure loans. Most of the funds will reportedly come from the pockets of Sears Holdings’ largest shareholder and Chief Executive Officer Eddie Lampert.
The retail corporation also plans to lease some of its stores to better performing European clothing retailer Primark.
Another spokesperson for Sears Holdings said that despite the numbers being shown, “we continue to have a substantial nationwide footprint with a presence in many of the top malls in the country.”
Since announcing its business model Monday, Sears Holdings’ shares immediately increased by 23 percent. On Thursday, the company’s shares raised again by 4.5 percent to $35.95. The company will continue to execute its closing strategy, which will affect locations in over 20 states. Currently, Michigan, Indiana, and Pennsylvania have been affected. Others store locations in states including Wisconsin, Florida, Maryland, and New Jersey should also look forward to being removed from the market.
Riefs added that the number of closures that will happen before the end of the year is undecided. However, the retail market can expect to see at least 130 stores go out of business, if not more. “Make no mistake, we believe the store will continue to play an integral role in our transformation," he said. "However, if a store is not generating a profit, it is straightforward that the store should be considered for closure.”
The company has notified all underachieving stores in advance.
Any where between 5,000 and 6,000 workers are expected to lose their jobs within the next few months.
Sears Holdings confirms that it will inform the public next month when updates arrive for its third quarterly store count.