Sears Holdings (SHLD, Financial), the Hoffman Estates, Illinois-based owner of retail store brands Sears and Kmart, announced Thursday that it will close 78 stores – 68 Kmart stores in 26 states and 10 Sears stores in eight states – in the next five months.
All of the Sears stores and all but two of the Kmart stores will close by late July, Sears Holdings announced. Two Kmart stores – in Taylor, Michigan, and Lorain, Ohio – will close in September. In selecting which stores to shut down, the company said it considered stores’ historical and recent performances and the timing of lease expirations.
Following the announcement, the price of shares of Sears stock went up 5.6%.
The company announced in February that it would expedite the closing of unprofitable stores. The affected Kmart stores will begin liquidation sales next month. The affected Sears stores will begin liquidation sales next week.
“Sears Holdings expects the store closures to generate a meaningful level of cash from the liquidation of store inventory and from the sale or sublease of some of the related real estate,” the company said in a press release.
Edward Lampert (Trades, Portfolio), chairman and chief executive officer of Sears Holdings, called the decision to close the stores “a difficult but necessary step” in restoring the company’s profitability. Lampert also pledged the company’s assistance for store associates who are affected by the closings and seek employment at other Sears and Kmart stores.
Sears Holdings’ leading shareholder among the gurus is Bruce Berkowitz (Trades, Portfolio), with a stake of 26,573,448 shares following his sale of 25,400 shares on April 6. Berkowitz’s stake is 24.89% of Sears Holdings’ outstanding shares and 16.05% of Berkowitz’s total assets.
Lampert’s stake in the company is 22,336,105 shares. That stake is 20.92% of Sears Holdings’ outstanding shares and 31.51% of Lampert’s total assets.
Sears Holdings has a P/S of 0.07. GuruFocus gives Sears Holdings a Financial Strength rating of 6/10 and a Profitability and Growth rating of 3/10.
Sears Holdings trade for $18.1 per share Friday afternoon.
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