SHLD announced year-to-date results as of 12/25/2011 with Kmart same store sales down 1.8%, continuing the familiar news of declining sales, revenue, profit, etc.
From the press release:
"While our past practice has been to keep marginally performing stores open while we worked to improve their performance, we no longer believe that to be the appropriate action in this environment. "
What does that mean? Basically, over 100 stores will be closed in 2012... as in they know a bunch of stores are "marginal" and haven't done diddly-squat to improve them, and are now going to pay the price. Here's more from the PR:
"Given our performance and the difficult economic environment, especially for big-ticket items, we intend to implement a series of actions to reduce on-going expenses, adjust our asset base, and accelerate the transformation of our business model. These actions will better enable us to focus our investments on serving our customers and members through integrated retail - at the store, online and in the home," said Chief Executive Officer Lou D'Ambrosio. Specific actions which we plan to take include:
- Close 100 to 120 Kmart and Sears Full-line stores. We expect these store closures to generate $140 to $170 million of cash as the net inventory in these stores is sold and we expect to generate additional cash proceeds from the sale or sublease of the related real estate. Further, we intend to optimize the space allocation based on category performance in certain stores. Final determination of the stores to be closed has not yet been made.
Basically, this means they have no clear plan for recovery other than continuing to close stores, which is not a good plan at all. "Integrated retail" isn't going to work - MyGofer was a flop (even Wal-Mart now has site-to-store online shopping), Sears.com marketplace isn't going to beat Amazon on price, Walmart has layaway nowadays... why would most people still shop at a 40-year-old Kmart whose last remodel was in the 1980's other than to beat the crowds at large Walmart supercenter? Yes, Kmart still has profitable urban/city center locations, but even Walmart is adapting with smaller footprint urban stores and continued invasion of major cities like Chicago, NY, Philly, DC, San Francisco, and Boston.
UPDATE: A partial list of store closings can be found here.
UPDATE 2: As noted per some astute readers in the comments, some of the closing stores were profiled previously on this blog, for example: