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Sears (SHLD) will accelerate planned store closures and continue to purge other assets to keep its business turnaround afloat after reporting Tuesday that the holiday season will fall short of expectations.
Sears expects sales to come to $7.3 billion for the quarter ended Jan. 30, compared with $8.0 billion in the year-ago quarter and below analyst estimates for $7.4 billion, according to S&P Global Market Intelligence. Sears reports fourth-quarter and full-year results on Feb. 25.
Sears estimates sales at stores open at least a year, a key measure for retailers, fell 7.1% in the quarter at Sears and Kmart U.S. stores as the company's apparel business dragged down store performance. The company attributed its weak showing to unseasonably warm weather and "intense competition."
As a result of its falling sales, Sears plans to speed up 50 planned closures of unprofitable stores this year and look at other ways to cut costs by between $550 million and $650 million, including evaluating staffing levels. The company has not disclosed which stores are set to close.
Sears will also sell at least $300 million worth of additional assets in the first half of the year and is considering a sale of the Sears Auto Center business. That will be on top of moves the company made last year to start selling off its significant real estate portfolio into a real estate investment trust in order to raise cash.
The Hoffman Estates, Ill.,-based retailer has been struggling for years to regain traction with customers who no longer feel compelled to walk through the door, lured away by online retailers, more exciting apparel at brands such as Target and H&M and appliance deals at places like Lowe's and Home Depot. Its shares have lost roughly half their value in the past year. The stock was down 4.4% in morning trading Tuesday.
Sears has been heavily pushing a transformation toward what it calls a "member-centric" model based on a loyalty program and more personalized promotions for customers. In today's announcement, the company also said it plans to improve its apparel offering with changes to product sourcing, assortment and pricing.
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