Columbus Dispatch...
Sears, Kmart to shut stores as sales fall  
Decemberr 29,2011 

At a time when holiday sales overall have turned out better than expected, Sears Holdings Corp. has been an exception. It said yesterday that it will close 100 to 120 Sears and Kmart stores after disappointing seasonal sales. 

The final list of stores to be closed hasn’t been determined, Sears said. 

In a change of strategy, the company said it no longer plans to keep “marginally performing” stores open while it works to improve their performance. 

Sears, which has more than 4,000 full-line and specialty retail stores in the United States and Canada, said it plans to take as much as $2.4 billion in charges against earnings in the fourth quarter on asset writedowns and other items. 

Kmart’s same-store sales fell 4.4 percent during the eight weeks through Christmas, and Sears’ same-store sales were down 6 percent during that same period. In contrast, the National Retail Federation raised its industry holiday forecast this month to a 3.8 percent increase from a 2.8 percent gain. 

“The moves announced by Sears point to desperation,” said Credit Suisse analyst Gary Balter. 

The company attributed the results at the Kmart chain to lower electronics and apparel sales as well as lower layaway sales. At the Sears chain, the company said demand was hurt by lower electronics and home-appliance sales. 

Analysts have said Wal-Mart Stores Inc.’s decision to relaunch layaway on toys and electronics categories has also hurt demand at rivals, including Target Corp. 

Still, Wall Street has repeatedly faulted Sears, whose majority owner is hedge-fund investor Eddie Lampert’s ESL Investments, for skimping on investing in its stores. 

“It begins and ... ends with Sears’ reluctance to invest in stores and service, effectively asking customers to pay for a poorer shopping environment than available at competitors and online,” Balter said. “We do not see how that will turn around.” 

One central Ohio observer is not surprised by Sears Holdings’ decision to close stores. 

“Sears and Kmart both have a lot of obsolete real estate in their portfolios,” said retail analyst Chris Boring, owner of Boulevard Strategies in Columbus. 

“Because so much of their expansion was in the 1960s and ’70s, they still are in a lot of those older locations that don’t have the high traffic that they once had. Sears made its impact in the ’60s with Eastland and Westland, for instance, and those areas have declined. 

“I don’t think it’s because of one poor holiday season.” 

Officials at Glimcher Realty Trust were monitoring the closings situation closely, said Lisa A. Indest, senior vice president of finance and accounting at the Columbus-based firm.

Glimcher owns Polaris Fashion Place, Eastland Mall, Indian Mound Mall in Newark and River Valley Mall in Lancaster, all of which include Sears stores. 

Even so, Indest said, “the planned store closings are less than 5 percent of Sears and Kmart stores, and Glimcher has very limited Kmart exposure in its portfolio.” 

In addition to poor locations that have less traffic flow than they did decades ago, Sears and Kmart suffer other problems, Boring said. 

“The only reason why people buy at Kmart is because it’s close. No one would buy at Kmart if they’re closer to a Walmart or Target,” he said. “And Sears has had this problem forever: They’re stuck in the middle. It’s the low-price stores and upscale stores doing the best. The middle doesn’t stand for anything.” 

The news also comes only weeks after Ohio and other states failed in a bid to move Sears Holdings headquarters and 6,200-person staff from Illinois after a months-long flirtation. Ohio had offered Sears a package valued at $400 million, Illinois officials had said. 

“I find it ironic that they talk about store closings but don’t talk about if anything above store level will be affected,” Boring said. “We were pitching to get them, but I wonder if it was a case of, be careful of what you wish for.” 

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