Sears, Kmart to close up to 120 stores

Sears Holdings was walloped by Wall Street and Main Street on Tuesday, following news that it would close 100 to 120 of its Sears and Kmart stores in a bid to shore up finances.

Its stock tumbled 27% to $33.38. It's off 83% from an April 2007 high of $195.18.
Critical customers responded to the announcement by griping about messy stores and rude associates on online forums. A report issued Tuesday by Credit Suisse analyst Gary Balter said the company "effectively ask(s) customers to pay for a poorer shopping environment than available at competitors and online."
New sales data show that Sears Holdings stumbled during the all-important holiday shopping period. Comparable-store sales were down 4.4% for Kmart and 6% for Sears for the eight-week period ended onChristmas Day, the company said.
"We can do better than this. We will do better than this," Sears Holding CEO Lou D'Ambrosio said in an internal memo.
In addition to shuttering U.S. stores, the company plans to reduce fixed costs, improve inventory management and have more targeted pricing and promotions.
The iconic Sears and Kmart brands have been under the Sears Holdings umbrella since a 2005 merger. Sears Holdings Chairman Edward Lampert, a well-known financier who orchestrated that union, has taken much public heat about the combined companies' financial troubles.
Columbia Business School professor Mark Cohen— who was CEO of Sears Canada until 2004 — is critical of company management, as well as the pricing strategy and merchandise selection. "There is no retail turnaround that is possible," he says.
Yet, other industry observers aren't ready to count these storied retailers out.
Morningstar analyst Paul Swinand notes that Sears Holdings has well-known brands such as Craftsman tools and Kenmore appliances, and that its online business is strong.
Closing poor-performing stores will make the company "leaner and meaner," says Marshal Cohen, chief industry analyst at retail tracker the NPD Group. "They're getting rid of excess baggage," he says. "This is about preparing for the future. … They are still going to be a big retailer. This is just a dent."

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