Last week, US department store and general merchandise group Sears Holdings disclosed plans to close 100 to 120 Kmart and full-line Sears stores.

Last week, US department store and general merchandise group Sears Holdings disclosed plans to close 100 to 120 Kmart and full-line Sears stores.

It follows years of disappointing like-for-like sales at both chains, culminating in the eight weeks to December 25. In the key holiday period Kmart stores experienced a sales decline of 4.4% and Sears domestic operations suffered a sales fall of 6%.

The store closures are expected to generate $140m to $170m (£90m to £109m) as the net inventory in the stores is sold. The retailer said it would “carefully evaluate store performance going forward and act opportunistically to recognise value from poor-performing stores as circumstances allow”.

The Kmart and Sears chains merged in 2005 and analysts questioned whether this was the right move for two chains that were struggling even then. Given this, it is unsurprising that these closures have come, and many would question why they have not come sooner. Sears, in particular, has tried a number of options to abate its ailing performance to no avail, including subleasing store space to high-performing retailers such as young fashion chain Forever 21 and selling its own private label brands through other retailers.

The rise in the prevalence of ecommerce, and in particular the threat from pure play online retailers such as Amazon, makes things even harder for bricks-and-mortar retailers such as Sears and Kmart. Coupled with that is an ongoing threat to general merchandise retailer Kmart from competitors Walmart and Target, which continually up their game.

Sears chief executive Lou D’Ambrosio said: “Given our performance and the difficult economic environment, especially for big-ticket items, we intend to implement a series of actions to reduce ongoing expenses, adjust our asset base and accelerate the transformation of our business model. These actions will better enable us to focus our investments on serving our customers and members through integrated retail – at the store, online and in the home.”

As with all other mid-market retailers, the boundaries are being squeezed and neither Sears nor Kmart can continue in their current state. The company stated: “We intend to accentuate our focus and resources to our better-performing stores.” As the current projected closings only represent about 3% of the company’s 3,560-strong estate, and the focus going forward will be on the best-performing shops, it is likely that further closures will come in the not too distant future.

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