Sears losses lead to layoffs
Layoffs at Sears Holdings Corp. this week may not be the last, but there is no evidence of massive layoffs in the near future, according to retail analysts.
Hoffman Estates-based Sears confirmed Wednesday it will lay off about 200 people.
"Sears Holdings' results have not been satisfactory and because of that, as part of a continuing process, we are assessing our business priorities, cost structures and organization, and when and where necessary we will be making adjustments," said Chris Brathwaite, in a statement. "This week approximately 200 associates from our support center locations were impacted after a review of our organization."
Retail analyst Howard Davidowitz is pessimistic about Sears Holdings' ability to stay in business. He thinks the combined Sears and Kmart company has cut almost as many headquarters jobs as it can.
"I don't think Sears can get rid of its headquarters because someone has got to run the business," said Davidowitz, of Davidowitz & Associates, a New York-based retail consulting and investment banking firm.
Retail analyst John Melaniphy Sr. said Sears once had a reputation for having a top-heavy headquarters bureaucracy, but no longer does.
"They got rid of so many people I don't think they are (overstaffed)," Melaniphy said.
Retail analyst George Rosenbaum said Sears won't lay off more headquarters staff until it starts closing stores.
Sears employs about 5,000 people at its sprawling multi-use 200-acre campus at Prairie Stone Business Park. Including its holdings in Canada, Sears owns more than 2,000 department stores and Kmart runs nearly 1,400 discount outlets. Last year, its sales topped $53 billion.
With falling profits and store sales, Chief Executive Officer Aylwin Lewis stepped down recently. The company appointed head of supply operations W. Bruce Johnson as interim CEO.
Analysts said more layoffs may not happen until a permanent CEO is appointed.
Executive recruiters have said it may be difficult to find a chief executive officer with a successful track record to take over, given company owner Edward Lampert's often hands-on management style. The hedge fund billionaire is also Sears chairman.
Sears same-store sales have declined every quarter since Lampert arranged the merger of Kmart and Sears in 2005. In the most recent quarter, Sears' profit dropped 99 percent and its cash reserves were dwindling. Sears also warned fourth-quarter profit declined as holiday sales fell.
Last month, Sears announced a restructuring aimed at giving its five major business sectors more autonomy.
Other retailers, including Macy's Inc. and Home Depot Inc., have announced job cuts recently to curb costs as the challenging U.S. economy weighs on business.