Sears Holdings Corp (ticker: SHLD) announced Tuesday that is cutting 400 more jobs at its corporate offices in part of an ongoing $1.25 billion plan to return the struggling retailer to profitability.
Sears is hoping it can shrink its way to success by aggressively closing stores and reducing expenses. However, investors are still waiting for clear signs the turnaround efforts are getting the company’s declining sales numbers in check.
“We are making progress with the fundamental restructuring of our operations that we initiated in February,” CEO Eddie Lampert says in a statement. “We remain focused on realigning our business model in an evolving and highly competitive retail environment.”
In an email message to employees obtained by U.S. News & World Report, Lampert took a more personal tone. “As a leadership team, we are highly aware that it’s difficult to see friends and co-workers leave the company, but we truly believe these difficult steps will help align our cost structure with the size of the company today,” Lampert says.
Sears posted its first quarterly profit in nearly two years in the first quarter, but the headline number wasn’t as reassuring for long-time investors as it may seem. The profit was driven primarily by the sale of its popular Craftsman brand during the quarter.
In a 10-K filed in March with the Securities and Exchange Commission, Sears admitted “substantial doubt exists related to the company’s ability to continue as a going concern.”
At the beginning of 2012, Sears operated 1,305 Kmart stores and 867 Sears stores in the U.S. After closing many of its least-profitable stores, Sears entered 2017 with only 735 Kmart stores and 670 Sears stores. Despite the aggressive cost-cutting measures, Sears still reported an 11.9 percent decline in same-store sales in the most recent quarter. Sears will have to find a way to stabilize that decline before the stock has any chance of appealing to long-term investors.
“I don’t see Sears and Kmart stores sticking around,” CR3 Partners restructuring expert Gene Baldwin said…
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