NEW YORK — At a time when holiday season sales overall have turned out better than expected, Sears Holdings Corp. was an exception: It said Tuesday that it will close 100 to 120 Sears and Kmart stores after disappointing holiday sales.
Sears Holding Corp. hasn't said which Sears and Kmart stores will close. Northwest Ohio and southeast Michigan have nine Sears stores and eight Kmart stores:
- Toledo (Westgate)
- Northwood (Woodville Mall)
- Perrysburg (outlet store)
- Bowling Green (hometown store)
- Adrian, Mich.
- Toledo (E. Manhattan Blvd.)
- Toledo (W. Alexis Road)
- Toledo (Reynolds Road)
- Oregon (Navarre Ave.)
- Adrian, Mich.
The final list of stores to be closed hasn’t yet been determined, company officials said. The Hoffman Estates, Ill., company has more than 4,000 stores in the United States and Canada.
Sears’ stock tumbled 27 percent Tuesday to $33.38 a share, making it the biggest percentage decliner in the Standard & Poor’s 500 index. The shares have fallen 55 percent this year.
Sears said it no longer plans to keep “marginally performing” stores open while it works to improve performance. The announcement fueled speculation about whether the 125-year-old retailer can turn itself around.
The company has struggled with falling sales and shabby stores as rivals such as Wal-Mart Stores Inc. and Target Corp. spruced up their looks and turned into one-stop shopping sources.
Billionaire investor Edward Lampert purchased Kmart out of bankruptcy in 2003 and bought Sears, Roebuck & Co. a year later.
Sears Holdings — which operates both Kmart and Sears stores — has watched its cash and short-term investments go from about $2.09 billion for the year ended Jan. 31, 2004, to $1.34 billion for the year ended Jan. 31, 2011, according to financial research firm FactSet.
The figure now stands at about $700 million.
Mr. Lampert, who along with his hedge fund owns 60 percent of Sears, has presided over 18 consecutive quarters of declining sales. Before Tuesday’s announcement, Sears had closed 171 of its large U.S. stores since 2005.
Besides turning to smaller stores and franchising, Mr. Lampert has been leasing space to other retailers and trying to boost Web sales.
Gary Balter, an analyst with Credit Suisse, said the softer-than-expected holiday sales performance point to “deepening problems at this struggling chain and renewed worries about Sears survivability.”
Mr. Balter added that Sears’ weakening performance may lead its vendors to start to worry whether they will be paid. If vendors stop shipping to a retailer or start insisting on cash up front, it can spell the end.
One of Sears’ key suppliers, Whirlpool Corp., was down 8.93 percent to $46.62 per share.
Sears Holdings said revenue at stores open at least a year fell 4.4 percent at Kmart stores and 6 percent at Sears.
Sears disputes talk that it is in trouble financially or will have problems surviving. Spokesman Chris Brathwaite says Sears Holdings has more than $3.5 billion of liquidity, consisting of $700 million in cash and $2.9 billion available under its credit lines.
Still, Sears Holdings said its declining sales, ongoing pressure on profit margins, and rising expenses pulled its adjusted earnings lower. The company predicts fourth-quarter adjusted earnings will be less than half the $933 million it reported for the same quarter last year.
The retailer also anticipates a noncash charge of $1.6 billion to $1.8 billion in the quarter to write off the value of carried-over tax deductions it now doesn’t expect to be profitable enough to use.
The company said that the store closings will generate $140 to $170 million in cash from inventory sales. It expects the sale or sublease of real estate holdings to add more cash.
Some industry experts say part of the problem Sears is facing is that economic difficulties continue to grip its core customers. These middle-income shoppers have seen their wages fail to keep up with higher costs for household basics such as food.
But the bigger issue, analysts say, is that Sears hasn’t invested in remodeling, leaving its stores uninviting.
Preschool teacher Sara Kriz concurred. Picking up hair conditioner at a Kmart in Manhattan on Tuesday, Ms. Kriz said she shops at Kmart “only when I have to,” which amounts to once every few months. Yet she goes to Wal-Mart or Target almost weekly because, she said, they are cleaner and better stocked.
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