Lampert said in his blog post that the stores to be shuttered are “unprofitable.”
“Changes in consumer behavior are driving our vision and actions, and we continue to transform our business model so that our physical store footprint and our digital capabilities match the needs and preferences of our members….This is part of a strategy both to address losses from unprofitable stores and to reduce the square footage of other stores because many of them are simply too big for our current needs,” the chairman said.
The turnaround has been in the making for years, with Lampert trying to remake the old brick-and-mortar business model into one that is member-focused and mostly online, with a smaller physical store base.
But many credit analysts have remained cautious about Sears’ ability to turn around operations, given its credit profile and cash burn rate. While the company says it has assets that can be monetized to fund operations, the expectation is that there will be more store closures before the end of the year. So far, Sears still is expected to operate about 500 or so Kmart stores and just under 1,150 Sears stores once the current closure rate is completed. But that store count for each nameplate is still way down — about half — from the 1,200 Kmart locations and 2,100 Sears domestic stores at the start of 2012.
Sears is also trying sell its Kenmore appliance brand and DieHard battery brand, as well as its Sears Auto Centers and Sears Home Services businesses.
In an attempt to rejigger appliance sales to compete with home chains and local discounters such as P.C. Richards, as well as the re-entry of J.C. Penney Co. Inc. into the business last year, Sears last month opened its first Sears Appliances and Mattresses store in Pharr, Tex. Its first category concept store in appliances was opened last year in Fort Collins, Colo., called Sears Appliances.