Sears Holdings, which last month reported that same-store holiday sales plunged 16% after falling 15% in the third quarter, on Wednesday laid off about 220 employees across various departments in its corporate offices, a company spokesperson told Retail Dive in an email. The cuts are primarily but not entirely at the company's Hoffman Estates, IL, headquarters, he also said.
The move, effective immediately, is part of the restructuring announced last month, according to a company spokesperson. "The company will provide severance and transition assistance to those who are eligible and, as always, we are committed to treating associates with compassion and respect during this difficult time," he said.
- In early January the company also announced that 64 Kmart stores and 39 Sears stores will be closing between early March and early April, adding 100 to its roughly 400 store closures of last year.
Sears has been pulling various levers and twisting knobs to keep operations rolling, monetizing assets (including real estate and brands), moving around debt, shuttering stores and laying off workers. "The company continues to achieve significant progress in our restructuring program, with actions taken in fiscal year 2017," according to the statement emailed to Retail Dive on Thursday. "We have taken incremental actions to simplify our organizational structure, further streamline the company's operations, reduce unprofitable categories and close under-performing stores. As a result of these actions, in addition to other liquidity and strategic actions, we made significant progress in our efforts to improve our financial position and to sharpen our operating focus."
The company last year sold its popular Craftsman tools line to Black and Decker for $900 million and has begun outsourcing its Kenmore home appliance brand. Along with yet another loan from CEO Eddie Lampert's hedge fund, Sears said last month that it had changed the advance rate for inventory under its second lien notes (to 75% from 65%) and is working on an agreement to improve terms in its $1 billion non-first lien debt. Lampert said in a blog post that if the retailer could not negotiate a refinancing agreement, it would "consider all other options to maximize the value of Sears Holdings' assets."
Such moves have helped keep the company's Kmart and Sears banners around for much longer than many observers had predicted, but it's done little for the retailers' sales or long-term prospects. The job cuts announced Wednesday, then, come as no surprise, though they demonstrate that lever-pulling and knob-twisting continue to be the crux of its plan.
"Sears has a toxic mix of issues, with dramatically falling sales and rising debt levels putting enormous pressure on the company's finances," GlobalData Retail Managing Director Neil Saunders told Retail Dive in an email. "Cutting jobs, shutting stores, and streamlining the organization are all sensible and necessary responses."
But the escalating financial maneuvers may be facing diminishing returns, he warned. "We have two main fears. First, that Sears will not be able to cut fast enough to put the company on an even keel," he said. "Second, that even with deep cuts, Sears may still fall short of being profitable at an operating level."
Sears needs more than just cost cutting — it also needs more sales. "But this goal remains elusive," Saunders said. "As such, we believe further action from brand sales, licensing and other asset monetizing activities will be required to balance the books."