Sears and Kmart's parent company to close more than 100 stores

FROM THE EXPRESS TIMES

Sears Holdings Corp. plans to close between 100 and 120 Sears and Kmart stores to raise cash after a weak holiday shopping season for the retailer.

The closings fueled speculation about whether the 125-year-old retailer can turn itself around.

The closings are the latest and most visible in a long series of moves to try to fix a company that has struggled with falling sales and shabby stores as rivals like Wal-Mart Stores Inc. and Target Corp. spruced up their looks and turned into one-stop shopping sources.

“There’s no reason to go to Sears,” said New York-based independent retail analyst Brian Sozzi, “It offers a depressing shopping experience and uncompetitive prices.”

Sears has yet to determine which stores will close but said it will post on searsmedia.com when a final list is compiled. The company would not discuss how many, if any, jobs would be cut.

The company operates Sears stores at Phillipsburg and Whitehall malls. Kmart has stores in Wilson Borough, Bethlehem Township, Pa., Wind Gap, Whitehall Township and Allentown.

Billionaire investor Edward Lampert purchased Kmart out of bankruptcy in 2003 and bought Sears, Roebuck & Co. a year later. Since 2004 Sears Holdings — which operates both Kmart and Sears stores — has watched its cash and short-term investments go from about $2.09 billion for the year ended Jan. 31, 2004, to $1.34 billion for the year ended Jan. 31, 2011, according to FactSet.

The figure now stands at about $700 million. Credit Suisse analyst Gary Balter says the softer-than-expected holiday sales performance point to “deepening problems at this struggling chain and renewed worries about Sears survivability.”

Balter added that Sears’ weakening performance may lead its vendors to start to worry about their exposure.

If vendors stop shipping to a retailer or start insisting on cash up front, it can spell the end. That company disputes talk that it is in trouble financially or will have problems surviving.

Spokesman Chris Brathwaite says Sears Holdings has more than $3.5 billion of liquidity, consisting of $700 million in cash and $2.9 billion available under its credit lines.

Still, Sears Holdings said its declining sales, ongoing pressure on profit margins and rising expenses pulled its adjusted earnings lower. The company predicts fourth-quarter adjusted earnings will be less than half the $933 million it reported for the same quarter last year.

The retailer also anticipates a non-cash charge of $1.6 billion to $1.8 billion in the quarter to write off the value of carried-over tax deductions it now doesn’t expect to be profitable enough to use.

Some industry experts say part of the problem Sears is facing is that economic difficulties continue to grip its core customers. These middle-income shoppers have seen their wages fail to keep up with higher costs for household basics like food.

But the bigger issue, analysts say, is that Sears hasn’t invested in remodeling, leaving its stores uninviting.

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