Sears Shares Rise on News of 116 Stores Closure and Axing of 6,000 Employees; Retailer Describes Report as Inaccurate
|Vittorio Hernandez |||Oct 24, 2014 02:11 AM EDT|
(Photo : Reuters/Larry Downing) Women walk past the Sears department store at Fair Oaks Mall in Fairfax, Virginia.
News that American retailer Sears Holdings would close 116 stores and axe 6,000 workers causes shareprices of the company to rise 4.5 percent to $35.95 on Thursday. However, Sears was quick to correct the report, saying it is inaccurate.
The article by Seeking Alpha said the holdings would shutter 55 Kmart stores, 50 Sears department stores, and 31 Sears Auto Centers. USA Today said that the financial news and market tracker cited liquidation sale notices sent out by the holdings in September as the basis of its article.
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The bulk of the outlets to be closed before Christmas are in Pennsylvania, Michigan, and Indiana, but there would also be shut downs in 18 other states, specifically in Alabama, California, Florida, Illinois, Iowa, Kansas, Kentucky, Maine, Minnesota, Missouri, Montana, New Jersey, New Mexico, New York, Ohio, Vermont, West Virginia and Wisconsin, according to Seeking Alpha.
Howard Riefs, spokesman of Sears, said that the number of stores to be shuttered is not accurate, but did not provide specific numbers. However, he acknowledged that in the retailer's second quarter report, Sears announced that it would close unprofitable outlets when their leases end.
Explaining the firm's criteria in closing stores, Riefs said, "Make no mistake, we believe the store will continue to play an integral role in our transformation, however, if a store is not generating a profit, it is straightforward that the store should be considered for closure."
He promised to provide an update on the store count when Sears releases its third quarter financial results.
To reverse its losses, Sears, under CEO Edward Lampert, initiated cost-cutting measures, cut inventory, and sold assets to become profitable once again. It also changed focus from operating as a store network to running Shop You Way, a member-focused business.
However, the efforts failed to turnaround the business as seen in its last quarter that ended on Aug. 2. Sears reported a loss of $573 million, which is about 195 percent higher compared with the previous year's $194 million loss. By the second half of its fiscal year, the retailer's losses had reached $975 million.
Sears previously announced that it expects to shutter 130 outlets in 2014. So far, it has closed 95.
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