For almost a century, Sears has been based in Chicago. Now, the retailer is closing its last location in the city. FOX reports.
In a major restructuring bid which will cost the company upwards of $1 billion, Sears Holdings Corp will be laying off 130 employees from their executive offices in Hoffman Estates, Illinois. The company announced that the layoffs are due to a slowing of their traditional retail business.
The details of the firings were elaborated in an email sent by the Sears CEO, Eddie Lampert to the employees at headquarters, on Thursday.
Lampert stated in the memo that the layoffs are part of their cost-cutting plan which are
“necessary to create a more nimble operating structure capable of driving the company’s strategic transformation forward.”
Lampert has already announced earlier this month that Sears will be closing 150 stores over the next two months. Lowering overhead, especially at the corporate level, is also part of the plan.
Sears posted a 16 percent loss in revenue during the fourth quarter of 2016, about $6.1 billion. The hopeful holiday season proved flat for Sears, so cost-cutting seems the best choice to staying in business.
Two major trends have taken their toll on the iconic retail department store chain, which also owns Kmart stores: more on-line sales, and slower mall traffic. Over the past eight years the company has most likely lost about $9 billion as their traditional business model has come under increasing pressure.
Illinois-based Sears has agree to see the 89-year-old brand to Stanley Black & Decker for $525 million in cash and an additional $250 million by the end of the third year after the sale. In addition, there will be payments for up to 15 years as a variable percentage of sales. The approximate total value of the deal is $900 million, according to Sears.
The deal will allow the Connecticut-based Stanley Black & Decker the right to produce and sell Craftsman-branded tools in non-Sears stores in the US and internationally. Sears will also be able to sell Craftsman in its own stores through a perpetual license issued by Stanley Black & Decker. Stanley Black & Decker will receive royalties from Sears after a 15-year grace period.
“We intend to invest in the brand and rapidly increase sales through these new channels, including retail, industrial, mobile and online,” said Stanley Black & Decker CEO James Loree. “To accommodate the future growth of Craftsman, we intend to expand our manufacturing footprint in the U.S. This will add jobs in the U.S., where we have increased our manufacturing headcount by 40 percent in the past three years.”
The deal stipulates that Sears will receive annual payments from new sales from Stanley Black & Decker Craftsman during a 15-year period. Between now and 2020 Sears will get 2.5 percent of sales; from 2020 until 2023 3.0 percent; and for the remaining time, 3.5 percent.
On the heels of the announcement of 100 layoffs at the end of February, Sears is continuing its march to improved profitability with the closure of about 50 stores around the country.
Sears, whose headquarters is in Hoffman Estates, Illinois, announced that it is planning to speed-up shutting down of at least 50 “unprofitable stores.” Included in the action will be many K-Mart stores as well, which is owned by Sears Holdings.
“The decision to close stores is a difficult but necessary step as we take aggressive actions to strengthen our company, fund our transformation and restore Sears Holdings to profitability,” said Edward S. Lampert, Chairman and Chief Executive Officer of Sears Holdings. “We’re focusing on our best members, our best categories and our best stores as we work to accelerate our transformation.”
The original plan was to spread out the closures over several months, but because of poor sales during the holiday season, the parent company decided the process of closing stores should be sped up.
According to Sears’ earnigns report, released in February, total revenue for the fourth quarter of 2015 was $7.3 billion, down from $8.1 billion in 2014.
“Sears Holdings will continue to transform as the role of the store evolves to fit the way that members want to shop,” Mr. Lampert said. “Through our continued investments in Integrated Retail, our stores are a critical component of our strategy as we provide our members with industry-leading innovations such as Meet with an Expert, In-Vehicle Pickup and Return and Exchange in Five.”
Liquidation sales at closing K-Mart locations will begin on May 12, while those at Sears will start on April 29. The following Illinois K-Marts are on the chopping block:
- 7050 S Pulaski Chicago
- 721 N Vermillion Street Danville
- 1150 W Carl Sandburg Dr Galesburg
- 17355 Torrence Ave Lansing
- 2909 Court St Pekin
- 3840 46th Ave Rock Island