Sears Holdings Corp. plans to close 100 to 120 Sears and Kmart stores nationwide after lackluster sales, but there was no indication that Manhattan’s stores would be impacted.
Revenues at stores open a year or more fell 5.2 percent for the quarter at both Sears and Kmart. The falling sales combined with increased costs and pressure on profit margins have pulled down Sears Holdings’ adjusted earnings. The company predicts fourth-quarter adjusted earnings will be less than $466.5 million—a significant decrease from the $933 million it posted for the same quarter last year. However, at least one of Manhattan’s stores has bucked the national trend, which could save it from closure.
Dustin DeWitt, Manhattan Kmart store manager, said he can’t be certain that his store will remain open but said a closure seems unlikely.
“Based on the projected numbers we have nothing to worry about,” DeWitt said. “This store had a better than projected fourth quarter.”
DeWitt said his store, which employs 70 people, is “doing fine.” He added that it seems like stores in larger markets were hit harder than stores in moderate sized markets such as Manhattan.
A representative at the Sears store at the Manhattan Town Center referred all requests for comment to Sears Holdings’ corporate office, which was not responding to inquiries Tuesday morning. A department voice message said the company does not have any information about individual closings currently. It instructed media members not to leave a message regarding the closures and referred them to www.searsmedia.com. At mid-day, that site also had not yet posted a list.
Lyle Butler, CEO of the Manhattan Area Chamber of Commerce, wrote in an email that the Chamber hasn’t received any information on the local markets. Butler stated Manhattan’s retail climate remains strong, though.
“Locally, we continue to have a strong and growing retail market that out performs peer cities in Kansas and nationally for retail growth,” Butler said. “We believe this trend will continue.”
The closings are part of a strategy by the retailer to reduce expenses in tough economic times.
“Given our performance and the difficult economic environment, especially for big-ticket items, we intend to implement a series of actions to reduce on-going expenses, adjust our asset base, and accelerate the transformation of our business model,” Lou D’Ambrosio, Sears Holdings CEO, said in a company press release.
The document noted Sears Holdings retail stores, Sears and Kmart, saw decreased sales in 2011. The general dip in sales is attributed to decreased sales in specific categories such as consumer electronics, apparel and home appliances.
Going forward, Sears Holdings plans to focus on cash-generating stores, while it will close “marginally performing stores.” The company expects to generate $140 to $170 million from the closures by selling net inventory at those stores. Sales or subleasing of the closed Sears and Kmart properties would add extra cash as well. It also aims to reduce its fixed costs by $100 to $200 million.