Sears Holdings Corp. is in a bad way, and the economy has not helped. The corporation said Tuesday that it will be closing between 100-120 of its Sears and Kmart Full-Line stores, and also that its adjusted EBITDA for the fourth quarter of 2011 is expected to drop by more than half from its level in Q4 of 2010.
Reuters reported that it expects to bring in $140 million to $170 million by selling off the inventory of the affected stores, and by selling or subleasing its store space.
In a statement, the company said that for the latest quarter, same-store sales at its Kmart unit dropped 4.4% and comparable sales at Sears Domestic fell by 6%. Last year, Sears Holdings Corp. reported $933 million in adjusted fourth-quarter earnings before interest, taxes, depreciation and amortization.
Store closures and reduction in inventory are expected, according to the company, to reduce peak inventory in 2012 by $500 million to-$580 million. It further expects to record a noncash charge of $1.6-$1.8 billion in the fourth quarter, related to a valuation allowance on certain deferred tax assets.
Relatively slow sales for Christmas did not help the retailer, which has suffered not just from the economy and stiff competition, but also from its own reputation for shabby locations and poor customer service.
Post-Christmas sales look unlikely to help, either, as consumers are not thronging stores as in previous years but instead, if shopping at all, are aggressively bargain-hunting. Bloomberg reported that despite substantial discounts on the day after Christmas, many malls and shops were experiencing less-than peak crowds.
In the report, Chris Christopher, an IHS Global Insight economist, was quoted saying that a continued weakness in home prices and an unemployment level of 8.6% continue to weigh on U.S. consumers. He added, “It’s not going to be a gangbusters Christmas. People are not doing that well. What’s happening with personal income and consumption is disheartening.”