Coming back from Christmas break, we find that Sears and Kmart, both owned by Sears Holdings Corp, had a devastating holiday sales season. Sales at same store locations were off 5.2% from one year ago. This while most other retailers are reporting modest gains.
In response, Sears Holdings Corp announced yesterday that they will be closing 100 to 120 Sears and Kmart stores across the US. That amounts to about 3% of their US locations. Sears stock dropped 27% when the news of the disappointing forth quarter earnings and store closings broke.
Sears has not announced which locations will close, but they did say they will be targeting lower performing locations.
Both Sears and Kmart has been an icon for shoppers for generations. Sears was founded in 1886 as a mail order business. Richard Sears and Alvah C. Roebuck published their company’s catalogues with prices that undercut local general stores’ prices. They eventually went on to sell not only sewing machines, tools and clothes, but also cars and pre-fab homes. Kmart, founded in 1962, made “Blue Light Specials” a household phrase. Sears and Kmart, both struggling to compete against Walmart, merged in 2004.
Sears and Kmart face many challenges. Both have been criticized by shoppers and analysts alike for their run-down stores. One of Sears’ main lines of products is appliances, which have experienced slow sales as many of us shoppers have put off major purchases during the sluggish economy. Another challenge faced by both Sears and Kmart stores is that many did not follow their customer bases to new locations, leaving them now in old shoppers centers, many with empty stores as neighbors.
We will have further news on the Sears and Kmart closures as more details become available.