Sears Holdings Corp. aims to slash costs by at least $1 billion this year as part of a new restructuring plan that calls for cuts to corporate overhead and could include more store closures.
The Hoffman Estates-based department store chain already has sold off assets to bolster its ailing Sears and Kmart businesses. Sears previously announced plans to close 150 stores by spring, but the company said in a news release Friday that it would "actively manage our real estate portfolio to identify additional opportunities for reconfiguration and reduction of capital operations."
Sears’ plan also calls for consolidating Sears and Kmart corporate and support operations. A team is designing a new organizational model, which may include job cuts, Sears spokesman Howard Riefs said.
"These decisions are never taken lightly, but they are a necessary part of our efforts to become a more competitive retailer and to return our company to profitability," he said.
Riefs said Sears also intends to improve its selection of merchandise, studying data on its sales and best customers in its membership program to identify unprofitable product categories that could be cut to allow the company to focus on categories where it wants to grow, including home appliances and home services.
After signing a roughly $900 million deal to sell its Craftsman brand to Stanley Black & Decker last month, Sears said it is continuing to look for options for two other popular brands, Kenmore and DieHard, and its Sears Home Services and Sears Auto Centers businesses.
Sears, which has been losing money for years, also said it expects to write down the value of its trade name by $350 million to $400 million.
But comparable-store sales in the fourth quarter of 2016, while down 10.3 percent across both chains, were better than the early holiday results the retailer shared last month. Shares were up about 40 percent Friday morning.
"We believe the actions outlined today will reduce our overall cash funding requirements and ensure that Sears Holdings becomes a more agile and competitive retailer with a clear path toward profitability," Chairman and CEO Edward Lampert said in a news release.
More to come.
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