Sears Holdings will close 150 stores and is selling its well-known Craftsman brand as the struggling retailer takes further steps to offset slumping sales.
The company said it would shutter 109 Kmart locations and 41 Sears stores as part of a plan to transform Sears from a store-based, asset-intensive business model into a membership-focused, asset-light business model. (See a complete list of store closures.)
In addition, Sears is also selling its Craftsman business for a cumulative $775 million to Stanley Black & Decker. The agreement allows for a perpetual license for the Craftsman brand, royalty free for 15 years, and a 15-year royalty stream on all third-party Craftsman sales to new customers.
“We are taking strong, decisive actions today to stabilize the company and improve our financial flexibility in what remains a challenging retail environment,” said Edward Lampert, chairman and CEO of Sears Holdings. “We are committed to improving short-term operating performance in order to achieve our long-term transformation.”
Lampert said the stores slated for closure collectively generated about $1.2 billion in sales over the past 12 months, but also generated an adjusted EBITDA loss of approximately $60 million over that same period.
“The decision to close stores is a difficult but necessary step as we take actions to strengthen the company’s operations and fund its transformation,” he said. “Many of these stores have struggled with their financial performance for years.”
Lampert said sales at Sears and Kmart stores continued to be challenging through the first two months of the fourth quarter, with same store sales down in the range of 12% to 13%.
“We have continued to manage inventory and costs closely and our current quarter to date adjusted EBITDA performance is largely in line with last year, despite the sales declines,” he said. “Our home services business continues to improve and we believe it is positioned to be a pillar of growth going forward. We are continuing to explore ways to maximize the value of our home services and Sears Auto Centers businesses as well as our Kenmore and Die Hard brands through partnerships or other means of externalization.”
