Before the start of the holiday season Sears had already begun its restructuring, closing down a few stores in an effort to minimize expenses. Of course, they had also hoped that the traditional lush holiday retail environment might help cushion the efforts in the New Year, but the company reported, on Tuesday, that holiday sales will fall short of their expectations.
Indeed, it was a difficult holiday for most retailers. The winter was warmer than expected and that makes it hard for a retailers like Sears—who sell cold-weather (seasonal) goods and apparel—to keep profits up. Even Macy’s and Kohl’s had trouble in the winter of 2015.
As such, Sears Holdings Corporation estimates that fourth quarter sales will fall far below analyst’s expectations. This, they also say, will likely help speed along the closure of at least 50 unprofitable stores over the course of the next few months.
Of course, this is a major turn of events for a company that was, at one point, the largst retailer in the United States. Trendier and cheaper stores (Target Inc and Walmart Stores Inc, respectively, but not exclusively) have made this market far more competitive. They reported a more than 7 percent drop in sales at the company’s more established stores, this holiday season.
The Sears retail strategy was to provide a place for people to go and examine the goods they would buy on display, a type of lifestyle marketing ploy. But people are also turning to the internet for lower prices and to avoid high pressure sales; some just don’t have the time to visit the mall.
In the latest announcement, then, the company reported they plan to cut between $550 million and $650 million by the end of this year, 2016. The total amount will depend on overall selling volume; they hope to reach $300 million in asset sales in the next six months. Also, they report they have reduced its debt by roughly $1 billion.
Sears expects to report its final fourth quarter results by February 25th, at which point they will likely also detail more on the move to close to stores and the direction of the company.