Sears Holdings chairman/CEO and majority shareholder Eddie Lampert took to the bully pulpit that is his corporate website last week to assure the financial and vendor communities that’s everything’s under control.
His rare blog follows reports of vendor concerns over Sears’ liquidity as the retailer stocks up for the approaching holiday season.
It also follows published reports of plans to pull the plug on 64 more Kmart stores, or about 8 percent of its remaining store base.
Sears hasn’t confirmed the number, but Business Insider — which has been taken to task by the retailer for forecasting Kmart’s “imminent demise” based on employee interviews and a Moody’s assessment — has compiled a 28-state list of supposed locations culled from sales associates’ accounts.
Sears has, however, alerted local media in affected markets that closeout sales would commence Sept. 22 and that the stores will remain open until mid-December.
“We have been strategically and aggressively evaluating our store space and productivity,” spokesman Howard Riefs said in emails to local press, “and have accelerated the closing of unprofitable stores as previously announced.”
The latest round of closures includes 17 stores the company had leased back from a real estate investment trust (REIT) it formed last year to move some of it brick-and-mortar holdings off its books, and follows the shuttering of 68 Kmart’s last summer and about 50 locations last winter.
The cumulative closures will leave the discount chain with over 700 stores by year’s end, down from 1,360 a decade ago, according to TWICE’s 2007 Top 100 CE Retailers Report.
In his essay, Lampert said the company remains committed to Kmart and the brick-and-mortar channel; is still evolving toward its Sears-and Kmart-neutral Shop Your Way retail brand; could fund operations through its assets, if need be; and is looking for ways to further monetize its Kenmore, Craftsman, DieHard and home services businesses.
Indeed, according to news reports Sears is entertaining offers for its Craftsman tool brand from Stanley Black & Decker, Electrolux’s former Husqvarna AB unit, and other potential bidders that could provide as much as a $2 billion cash infusion — more than enough to tide it through Christmas.
Lampert’s blog, in its entirety:
Committed To Our Members, Kmart And Our Transformation
“Last week, we announced a partnership between Shop Your Way, Sears Auto Centers and Uber. This is another example of how we are transforming Sears Holdings to focus on serving our Shop Your Way members in a wide variety of ways. You should expect additional partnerships over time emphasizing our Shop Your Way business and demonstrating ways that we will bring value to our members’ lives every day.
“I also wanted to comment on the frequent false and exaggerated claims surrounding our Kmart business. Recent reports have suggested that Kmart will cease its operations. I can tell you that there are no plans and there have never been any plans to close the Kmart format. In fact, we’ve been working hard to make Kmart a more fun, engaging place to shop, powered by our integrated retail innovations and Shop Your Way. To report or suggest otherwise is irresponsible and is likely intended to do harm to our company to the benefit of those who seek to gain advantage from posting these inaccurate reports.
“There are a few things that are very important for you to keep in mind. First, Kmart continues to operate over 700 stores. Second, a significant number of these stores are profitable and have been profitable for many years. Third, we have been clear that we are intent on improving the performance of our unprofitable stores and, if we cannot, we will close them. Actions to improve our store productivity, including reducing inventory stored in the stockrooms, are designed to make our stores easier to operate and to eliminate unproductive inventory and processes. Decisions to close stores are never easy, but we recognize that the way people are shopping is changing significantly. This is why we have made major investments in our online and mobile platforms and this is why our focus on serving members through Shop Your Way is so important.
“We are acting more aggressively and continuing to evaluate stores as leases expire and as other opportunities present themselves that improve the economics of Sears Holdings. We expect to end up with a large chain of stores, some owned and some leased, but with a company focused on serving members broadly through Shop Your Way rather than exclusively or predominantly through our stores. Our stores remain extremely important to our future, but as part of an overall focus on serving our Shop Your Way members.
“We are working to restore the company to profitability. Our significant asset base gives us the wherewithal to fund our business, but we don’t intend to use our asset value to support losses. Focusing on our best members, best stores and best categories means a smaller overall store footprint, and one that still represents one of the largest number of stores and square footage in the United States. We have a process underway to create value by positioning our Kenmore, Craftsman and Die-Hard businesses as well as our Sears Home Services business to benefit from broader distribution and partnerships that will allow them to grow beyond Sears Holdings. We also possess a significant portfolio of real estate assets with an opportunity to create value through improving our retail productivity and by monetizing them in a variety of ways.
“While the retail environment generally has been challenging and we won’t be able to restore profit immediately, we are focused on executing our plan and establishing a foundation from which Sears Holdings can grow for years to come. It isn’t easy and there will be bumps along the way, but we have tens of thousands of hard working men and women dedicated to transforming the company and making our members lives better and easier every day.”
— Eddie Lampert, chairman/CEO, Sears Holdings Corp.
