International News
See other International News Articles
Title: Troubled Sears closing U.S. stores
Source:
Montreal Gazette
URL Source: http://www.montrealgazette.com/busi ... sing+stores/5916527/story.html
Published: Dec 28, 2011
Author: Eric Lam
Post Date: 2011-12-28 00:44:57 by A K A Stone
Keywords: None
Views: 868
Comments: 4
Shares of Sears Holdings Corp. plunged more than 27 per cent to their lowest levels in three years Tuesday after the department store announced it was closing as many as 120 stores after a miserable holiday shopping season capped several years of strategic blunders amid intensifying competition. Sears shares fell $12.47 U.S., or 27.20 per cent, to close at $33.38 U.S. on the Nasdaq in New York, the lowest the shares have been since the financial crisis and the biggest one-day decline since 2003. Canadian markets were closed for the Boxing Day holiday. Shares of Sears Canada Inc. closed at $11.56 C on Friday, down 40 per cent so far this year. A spokesperson for Sears Canada, which installed a new chief executive six months ago, said the company had no plans to close stores in Canada. The company is 94 per cent-owned by Sears Holdings. Gary Balter, analyst with Crédit Suisse, said Sears has been crippled by a long list of problems, including intense competition from hardware chains The Home Depot Inc. and Lowe’s Cos. Inc. and discount retailers Wal-Mart Stores Inc. and Target Corp., poor brand integration with Kmart after its 2005 merger, failed bets on ventures such as the Kardashian Kollection product line and devalued real-estate holdings due to a lack of in-store traffic. “This was a company that four years ago was making $3.6 billion U.S. in EBITDA. This year, they’re going to make $400 million U.S. They’re making 10 per cent at a time when everyone else is turning things around,” Balter said on CNBC Tuesday. “Effectively, they’re asking customers to pay for a poorer shopping experience than their competitors and online.” Sears has done a decent job with its website, but the vast majority of its assets are tied up in the more than 4,000 retail stores in the U.S. and Canada, he said. “Canada has been very, very difficult, due to the harmonized sales tax,” Balter said. With the Canadian market about to get even more crowded as Target and other U.S. retailers cross the border, prospects for Sears look more uncertain. Calvin McDonald, a former executive with Loblaws Cos. Ltd. was brought in to head Sears Canada at the end of June. He said during an interview with the Financial Post in December he would focus on improving customer service and accountability, and focusing on products. Sears Holdings, based in the Chicago suburb of Hoffman Estates, Ill., announced before the market open Tuesday it planned to close between 100 and 120 Sears and Kmart stores in a bid to cut costs. The closings are expected to generate $140 million to $170 million U.S. as inventory is sold, as well as additional cash from the sale or sublease of the existing real estate. Sears also posted a weak holiday sales period in its fourth quarter, with overall same-store sales down 5.2 per cent. More than half of the decline in Sears same-store sales was due to consumer electronics, while Kmart also had to deal with weakness in apparel and lower layaway sales. Year-to-date, overall same-store sales are down 2.6 per cent, with Sears down 3.3 per cent and Kmart down 1.8 per cent. The combination of lower sales and margin pressure along with higher expenses means Sears now expects its fourth-quarter adjusted earnings before costs (EBITDA) to shrink by more than 50 per cent. In the fourth quarter of 2010, Sears generated $933 million U.S. in adjusted EBITDA, including $138 million U.S. from Canada. The bigger problem is that Sears has had to go into debt, on the hook for $483 million U.S. on its revolving credit facility in the midst of holiday season, when retailers should be most flush with cash. “If they don’t have cash flow now, that’s a negative signal,” Balter said. “Given our performance and the difficult economic environment, especially for big-ticket items, we intend to implement a series of actions to reduce ongoing expenses, adjust our asset base and accelerate the transformation of our business model,” Lou D’Ambrosio, chief executive with Sears Holdings, said in a statement. Edward Lampert, Sears chairman and the investor who engineered the Sears-Kmart merger, has been active trying to right the Sears ship, including introducing newer, smaller stores and licensing the Craftsman, DieHard and Kenmore brands. He’s also brought in new management to help turn things around, hiring McDonald and D’Ambrosio in the U.S. this year. Financial Post
Post Comment Private Reply Ignore Thread
Top • Page Up • Full Thread • Page Down • Bottom/Latest
#1. To: A K A Stone (#0)
Too bad. I remember one of my relatives who worked for them for over thirty years and in lieu of paid retirement had opted for their stock options. She retired a multimillionaire when she sold out.
"ROTFLMAO... Perfect! She longs... for someone to Teabag her. a man that squats on top of a women's face and lowers his genitals into her mouth during sex, known as "teabagging" She aches for it"... ~~~JWpegler. Head Tea Bagger and Tea Party supporter extraordinaire, explicitly expressing his fantasies in public about other posters.
I shopped at Sears this Christmas season. Got my son a nice set of ratchets, wrenches etc. They should try to compete with Lowes and Home Depot by selling lumber and lots more stuff for working on your home.
Sears closed their catalog/mail order stores some years ago, before online shopping became so popular. They quit at the wrong time, just when shopping from home was about to boom. I bought a shallow well pump/pressure bladder years ago from catalog sales, that we had to order. Only took a few days, and it's a great rig, at a good price.
Obama's watch stopped on 24 May 2008, but he's been too busy smoking crack to notice.
From the article. I didn't know they got rid of their catalog. I used to use that for christmas shopping list when I was a kid. But they are online apparently.
Sears shares fell $12.47 U.S., or 27.20 per cent, to close at $33.38 U.S. on the Nasdaq in New York, the lowest the shares have been since the financial crisis and the biggest one-day decline since 2003. Canadian markets were closed for the Boxing Day holiday. Shares of Sears Canada Inc. closed at $11.56 C on Friday, down 40 per cent so far this year.
#2. To: mininggold (#1)
#3. To: A K A Stone (#2)
"We (government) need to do a lot less, a lot sooner" ~Ron Paul
#4. To: hondo68 (#3)
Sears has done a decent job with its website, but the vast majority of its assets are tied up in the more than 4,000 retail stores in the U.S. and Canada, he said.
Top • Page Up • Full Thread • Page Down • Bottom/Latest
[Home] [Headlines] [Latest Articles] [Latest Comments] [Post] [Mail] [Sign-in] [Setup] [Help] [Register]