Sears and Kmart could close entirely, owner hints
HOFFMAN ESTATES, Ill — One of America's oldest retailers faces a grim future if it can't solve its financial problems.
In its annual report filed with the Securities and Exchange Commission, Sears Holdings, which owns both Sears and Kmart, outlined a number of challenges faced by the retailer ranging from competition from other retailers, both brick-and-mortar and online, to increased operating costs.
"We acknowledge that we continue to face a challenging competitive environment," the report said, and reported a loss in 2016.
The company has tried to improve profitability and cash flow with a restructuring program to cut $1 billion in costs and maximizing its assets with moves like selling its iconic Craftsman line to Black & Decker. More than140 stores are scheduled to close in 2017 and the company will try to leverage its Kenmore and DieHard brands plus their Home Services and Sears Auto Centers.
"We expect to generate additional liquidity through the monetization of our real estate and additional debt financing actions," the company wrote.
But the company is not confident in its ability to generate enough cash to keep going.
"Our historical operating results indicate substantial doubt exists related to the company's ability to continue as a going concern," the report said. "However, we cannot predict, with certainty, the outcome of our actions to generate liquidity, including the availability of additional debt financing, or whether such actions would generate the expected liquidity as currently planned.
The company currently operates 21 Sears and 25 Kmart locations in New Jersey. Kmart stores in Clementon, East Brunswick, Pleasantville and Rio Grande will close this spring.
JCPenney announced plans to close 138 stores across the country including its Rio Grande store as retailers continue to struggle. Macy's announced plans to close additional stores in 2017 while Staples will close 70 stores but have not specified locations.
HHGregg, American Apparel, BCBG Max Azria, The Children’s Place, The Limited and Men’s Wearhouse have all announced they will close locations in 2017 will also close.
Contact reporter Dan Alexander at Dan.Alexander@townsquaremedia.com
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