Sears Holding announced on Thursday, May 31, 2018, that it would be closing more than 70 stores in 2018 due to lackluster sales numbers.
Lackluster may be an underwhelming term to describe the chain’s current situation. Sales have dropped by about 30 percent since this time last year. The company identified 100 stores it deemed as “unprofitable” with 72 of them set to shut their doors for good before the end of the year.
In a statement released alongside first-quarter fiscal reports, the chain said: “We continue to evaluate our network of stores, which are a critical component of our transformation, and will make further adjustments as needed and as warranted.”
The once-thriving chain has been put in a tough position as of late. While their rough financials meant store closures were the logical next step to save money and recoup costs, this may have had adverse effects. Sears noted that some of their lackluster sales reports were tied directly to the closing of locations around the country.
During the first quarter of this year, Sears and Kmart had almost 900 stores. This was down over 380 stores from a year ago, and closures started in January. 39 Sears locations and 64 Kmart locations went under that month, continuing to add to the list of hundreds of closed facilities throughout the past several years.
CEO Eddie Lampert explained the company’s decisions to close down certain locations. He said the company wasn’t at a point where they would keep a store open if it might work. Given the state of things and the continued drop in sales numbers, the chain is liquidating to get capital for pension plans.
But with a first-quarter loss of $424 million, or just under $4 per share, the company doesn’t have a lot of capital to throw around. Just a year ago, revenue was over $4 billion in total, where as now it’s below $3 billion. Sears also lost about $130 million in cash reserves in a year after burning through billions in the past two years trying to save their struggling business.
The company’s woes aren’t uncommon – many retailers have been experiencing similar struggles. While some blame the public’s widespread turn to online shopping others say that retailer’s short-term mentalities are coming back to haunt them. Toys R Us filed for bankruptcy recently, and their imminent closure was blamed on everything from the lack of appeal in specialty stores today to the poor decisions of new management.
While Sears was always a versatile store and appealed to many different types of shoppers, they’ve been outdone in almost every aspect by popular competitors like Target and Walmart. Things have gotten so bad the company has enlisted the help of a new committee to determine whether they would be wise to sell off some of their assets to recoup costs.
As the second half of the year awaits, Sears must prepare for the holiday season – which could be a time of make or break for them.