Sears Holdings Corp. is eliminating 400 full-time jobs, a move that will help it move closer to its $1.25 billion annualized savings goal.
The positions are mostly at the company’s corporate headquarters in Hoffman Estates, Ill., as well as support functions globally, certain positions at its field operations, and at some stores it began closing last week. So far the company is closing more than 180 stores. The retailer said it would provide eligible associates with severance compensation and transition assistance. Sears also said it first eliminated open positions and reduced contract employees to minimize the impact on full-time employees.
“We are making progress with the fundamental restructuring of our operations that we initiated in February,” said Edward S. Lampert, chairman and chief executive officer, adding that the company remains “focused on realigning our business model in an evolving and highly competitive retail environment. This requires us to optimize our store footprint and operate as a leaner and simpler organization.”
Sears said the actions it has taken so far has yielded nearly $1 billion in annualized cost savings, and that it is on track to deliver its stated goal of $1.25 billion for fiscal year 2017.
Those moves have included the pay down of $418 million of term loans under a revolving credit facility, and the extension of the maturity of $400 million of its $500 million 2016 secured loan facility for up to twelve months until July 2018. It also earlier this year annuitized $515 million of pension liability through an agreement with Metropolitan Life Insurance Co. When the company posted first-quarter results last month, it disclosed that Sears has monetized certain real estate properties, generating over $200 million in proceeds.
Sears is not done with its monetization efforts and could close even more stores in the second half of this year.
When it posted first quarter results on May 25, the company’s chief financial officer, Rob Riecker, said, “We will continue to evaluate our options to deliver further improvements to our operational performance and balance sheet.”
The company disclosed then that it is evaluating bids for more than 60 separate real estate properties. In addition to more real estate asset sales, Sears continues to evaluate transactions for its Kenmore and DieHard brands, and its Sears Auto Centers operation. The company sold its Craftsman brand to Stanley Black & Decker earlier this year in a deal valued at $900 million. That deal gave Sears an initial upfront cash payment of $525 million, subject to closing costs and an adjustment for working capital.
And while Lampert continues to tout Sears’ efforts to transform the company through a membership program, most credit analysts believe that it has an uphill battle in turning around the Sears and Kmart operations due to its debt load and ongoing losses.