So where is Sears’ promised transformation into a modern day retailer?
The department store company has talked a good talk in the last few years about turning itself from a traditional retailer dependent on big box stores into one that is more digitally oriented, focused on a membership model, and needing less physical space.
But at Sears Holdings (SHLD), the parent company that also owns Kmart, a continued sales slump is prompting the retailer to say it will close at least another 50 stores, following hundreds of closings in the last few years. Sears also said it is also considering selling off more assets, including its auto services business, to raise much-needed cash.
Holiday comparable sales at Kmart fell 7.2% and 6.9% at Sears, for the worst performance among major department stores including J.C. Penney (JCP), Macy’s (M), and Kohl’s (KSS) during the most important quarter for retailers.
“The holiday selling season proved to be challenging, with historically warm weather and intense competition pressuring margins and driving comparable store sales declines, particularly in our apparel and related softlines businesses,” Sears said in a press release.
That’s a pretty strong understatement.Trying to put some lipstick on a pig, Sears said that January was the best month of the quarter since comparable sales fell only 4.5%.
As Fortune reported last week, Sears’ apparel offering has fallen so out of favor with women, the selection at thrift store Goodwill is more popular. Sears said on Tuesday that because its clothes business had really slammed its margins, it planned to overhaul that unit with new sourcing, product assortment, space allocation, pricing, and inventory management practices.
Meanwhile Sears continues to close stores. The company said it would speed up the pace of the closings in the next few months as it shutters at least 50 more. Store fleets have shriveled: Kmart is now down to 950 locations from 1,309 just five years ago, while Sears’ namesake department stores now number 708, from 868 in 2011.
Last year, to raise cash and avoid a liquidity crunch, Sears sold off many of its best store locations to a real estate investment trust, reaping $2.7 billion. In the last few years, it has sold off assets like Sears Canada and the Lands’ End apparel brand. But those assets are limited, and the company urgently needs to turn its core business around.
