Sears Holdings Corp. is closing eight of its namesake department stores and 35 Kmart locations to cut costs and square footage in an effort to return to profitability, Chief Executive Officer Eddie Lampert said on Friday.
The store closings are in addition to 150 the company announced in January. Once the largest U.S. retailer, Sears has struggled with years of losses and declining sales as shoppers have shifted from the mall to the web. The company said in February it would cut costs this year by at least $1 billion.
Shares of Sears fell as much as 4.8 percent in afternoon trading.
"This is part of a strategy both to address losses from unprofitable stores and to reduce the square footage of other stores because many of them are simply too big for our current needs," Lampert wrote in a blog post.
A Sears spokesman declined to say how many jobs would be lost from these store closures. He said employees who are eligible would receive severance and be able to apply for open positions at area Sears or Kmart stores.
Lampert added that Sears expects to open more smaller-format stores while shrinking its large, less-competitive ones. He said Sears was on track to meet its cost-cutting targets.
"We reached the point in the past 12 months where some of our vendors have reduced their support, thereby placing additional pressure on our business," Lampert said.
Sears suppliers told Reuters in March they were doubling down on defensive measures, such as reducing shipments and seeking better payment terms, to protect against the risk of nonpayment.
Lampert, in a version of the blog post updated on Friday afternoon, added that Sears had amended its second lien credit facility to provide up to $500 million in additional borrowing capacity and had sold over $200 million in real estate, helping Sears pay down part of its real estate loan.
Sears said in a separate statement that Lampert's hedge fund, ESL Investments Inc, controls one of the entities that has loaned money under the facility, and that ESL is considering participating in the facility as a lender.
As well as owning over 48 percent of Sears, Lampert and ESL - through its affiliates - have provided debt funding to the company several times since he was appointed CEO in 2013.
For a list of planned closures, click here.
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