Sears Holding Corp. plans to shutter additional Kmart stores in at least 13 states by mid-December, Business Insider reports, using information from store employees and financial filings.
The wave of closures comes after Sears already announced that it would close 68 Kmart and 10 Sears stores nationwide this summer.
Investment research firm Moody’s last week singled out Kmart as especially troubling for Sears, noting that recent downbeat ratings of the company “reflect our view on the uncertainty of the viability of the Kmart franchise in particular given its meaningful market share erosion.”
A quarter-century ago, Kmart was a bigger retailer than Wal-Mart Stores Inc. in the U.S. Now it’s a shadow of its former self. The retailer, owned by Sears, has closed a third of its stores in the past 10 years and has seen its sales halved in that time, according to Fortune.
Just a few weeks ago, the company took pains to say that Kmart isn’t preparing to shut down completely, after rumors surfaced that the unit was holding liquidation sales. Sears' problem, however, isn’t just that it’s over-stored, but also that its stores and merchandise have been neglected. Last month the retailer posted Q2 same-store sales declines of 3.3% at Kmart stores and 7% at Sears stores. Revenue in the quarter fell 8.8% to $5.66 billion. The company also said then that it would receive $300 million in additional debt financing secured by a junior lien against inventory, receivables and other working capital from CEO Edward Lampert’s hedge fund, ESL Investments, Inc.
Moody's Investors Service Tuesday downgraded Sears Holdings' Speculative Grade Liquidity rating of down to SGL-3 from SGL-2. Moody's Vice President Christina Boni said in a statement that Sears will “continue to rely on external financing and the monetization of its alternative assets to fund its operating losses.” She added that Moody’s estimates Sears’ negative operating cash flow at $1.5 billion this year.
Late last month, Kmart opened a “revitalized and refreshed” concept store in Des Plaines, IL, part of an ongoing marketing and rebranding initiative to provide enhanced, new and exclusive offerings aimed at millennial shoppers. The “Whole Lotta Awesome” effort touts Shoparazzi (a free personal concierge service that collects items from Shop Your Way rewards program members' shopping lists), a new beauty bar, an upgraded pharmacy and the 'Happy to Help' customer service center, which includes a kid's shop offering toys and candy available for purchase via Shop Your Way points.