Sears Holdings announced that the company plans to close 78 stores, including 68 Kmart and 10 Sears stores in the next few months with the bulk of closures happening in summer.
The Chicago-based retailer said that it would hasten the closure of unprofitable outlets amid financial woes the company is experiencing. The first wave of closure will happen by the end of April and most of the closures are expected to happen in July.
The announcement follows a series of evaluations of the store's portfolio. These took into consideration both the historical and recent store performance.
"The decision to close stores is a difficult but necessary step as we take aggressive actions to strengthen our company, fund our transformation and restore Sears Holdings to profitability," said Sears Holding's Chairman and CEO Edward S. Lampert.
The company reported in its most recent quarter financial status that it incurred a $580 million loss, way bigger that what it reported the year earlier at $159 million net loss. As sales continue to decrease, Sears Holdings hopes that the store closure to generate profit from the sale of some of its real estate and liquidation of the store inventory.
The company's affected employees will receive compensation, and for those who are still willing to work for the company, they are encouraged to fill in open positions.
Sears entered into a $500 million loan facility days before the announcement to be able to make its transformation feasible and to meet its financial obligations. The firm also closed on $750 million term loan, with a total amount of $1.2 billion of capital in debt financing.
The company said it has taken an important step to meet its objective in 2016 to restore its profitability. Its transformation is geared toward evolving its stores to meet the demand of customers and fit the way people shop today.
Sears Holdings has about 1,700 stores in the United States and the stores which will be closed include those in Chicago, Pittsburgh, Philadelphia and Rochester, New York.
"We're focusing on our best members, our best categories and our best stores as we work to accelerate our transformation," Lambert said.
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