Sears' retreat accelerates
Sears Holdings Corp., which Thursday announced plans to close 24 more stores on top of the eight it announced a few months ago, will probably be forced to close even more by year's end, analysts said.
"I would not be surprised if another 100 stores are closed by the end of the year," said George Rosenbaum, president of Leo J. Shapiro Assoc., a Chicago market research firm.
He predicted that by Christmas, Hoffman Estates-based Sears would be smaller with only the most viable stores remaining. He does not see Sears stores that hold anchor positions at large shopping centers closing anytime soon.
The announcement of the latest closings came after the largest U.S. department-store chain reported that fourth-quarter profit fell 55 percent after holiday sales plunged.
Only one Illinois Sears store, a Kmart in Lockport, is on the list to close with Thursday's announcement.
Sears is closing stores that are under performing in an effort to compete in a tough retail sector that has already claimed Linens 'n Things, Sharper Image and Circuit City, which have all filed for bankruptcy, analysts say.
"Oh sure, stores will close, but Sears will be around," said Paula Rosenblum, managing partner at Retail Systems Research in Miami. Four of the most recent closings, including three Kmarts and a Grand Essentials store, are set to close in Florida in May.
Analysts pointed out that Sears earnings, excluding items, beat Wall Street expectations.
In many cases, analysts believe retailers are using the struggling economy as an excuse to close stores.
"The funny thing about this economy is that every company is taking the opportunity to dump marginal stores and people. 2009 is a get out of jail free card for management," Rosenblum said.
She added that she was not surprised that additional stores were slated to close.
Locally, the company announced late last year that it plans to close The Great Indoors store at 1321 E. Golf Road in Schaumburg on March 11.
The company reported Thursday that net income declined to $190 million, or $1.55 a share, from $426 million, or $3.17, a year earlier.
Revenue dropped 12 percent to $13.3 billion in the three months ended Jan. 31 as U.S. retailers experienced the worst holiday shopping season in four decades.
Sales at stores open at least a year have fallen every quarter since Chairman Edward Lampert combined Seras and Kmart nearly four years ago.
What should the company do?
"They need to stay with their core strengths - major appliances and Craftsman tools," Rosenbaum said. While the retailer is strong in children's apparel, it needs to find a way to attract women looking for clothes. They don't attract enough women to the store."