Sears, Kmart parent company details 80 store closings
— -- Sears Holdings continued to struggle Friday in a week that the company will long remember for its announcement of plans to close up to 120 underperforming Sears and Kmart stores.
Late Thursday, the Hoffman Estates, Ill.-based parent company released a partial list of 79 Sears and Kmart stores that the company has selected to close and its website says other stores will be identified at a unspecified later date. The list as of Friday afternoon contained 80 stores. A Kmart in Indiana had been added.
Florida shoppers will be the most affected: 11 stores in the state will be shuttered as the parent company tries to bolster its finances by focusing on more profitable stores.
Michigan, Ohio and Georgia will have the second most closures, with six stores in each state closing.
The company announced shutdowns in 21 other states, including California, Alabama, Colorado, North Carolina and Virginia. Of the announced closings to date, 41 are under the Sears brand and 39 are Kmart stores. Those two retail brands have been under the Sears Holdings umbrella since they merged in 2005.
Shares of the company's stock were walloped Tuesday, when the initial announcement was made, closing down 27% for the day. On Friday, the final trading day of 2011, the stock fell another 2% to $32.32, and the shares are nearly 85% below an April 2007 high of $195.18 a share.
Of course, dismal holiday shopping results aren't helping the stock either. And investors likely sold on news that Fitch Ratings downgrading the company's credit rating to "junk" this week, which will make it costlier for the company to borrow.
On Wednesday, Standard & Poors Rating Services said it was putting some of the company's debt on review for a possible downgrade. In mid-November S&P downgraded Sears Holdings to "B" from "B+."
"We believe that one of the primary issues is that the company has underinvested in its stores base, especially when compared with its peers," S&P said in a statement.
Credit Suisse Analyst Gary Balter has criticized Sears Holdings' investments in its stores.
In a report issued Tuesday, Balter said the company "effectively ask(s) customers to pay for a poorer shopping environment than available at competitors and online."
For its part, the company's CEO is pledging to investors and employees that the plan is to make necessary changes to get the company back on track. It operates about 4,000 Sears and Kmart stores in the U.S. and Canada and has a workforce of 312,000. Annual revenues are $43 billion.
"We can do better than this," CEO Lou D'Ambrosio said in an internal memo to employees on Tuesday. "We will do better than this."
In addition to the store closings, Sears Holdings has said it will reduce fixed costs, improve inventory management and launch more targeted pricing and promotions. The company recently launched an apparel and accessory line tied to the Kardashian sisters of reality TV fame, which garnered a fair amount of media attention. And Sears stores continue to offer well known brand names such as Kenmore and Lands' End.
"Change is never easy, but is necessary," D'Ambrosio said in the memo. "Our industry is going through profound changes and we need to evolve our business and execute with speed and excellence."
In 2010, it shut down 22 stores. It closed four stores in the first quarter of 2011 and announced in the second quarter that another 35 would be shuttered.
Earlier this year, Sears Holdings also converted 14 Sears stores to Kmart stores.
Contributing: Associated Press
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