Sears holdings will close up to 120 units.
HOFFMAN ESTATES, Ill.--Projecting a sharp drop in fourth-quarter earnings, Sears Holdings Corp. has announced it will close between 100 and 120 Kmart and full-line Sears stores.
The company expects adjusted quarterly earnings before interest, taxes, depreciation and amortization to be less than half of the prior year's $933 million.
The closures are expected to generate $140 million to $170 million in cash as the stores' net inventory is sold, with additional cash coming from the sale or sublease of the related real estate.
"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," said chief executive officer Lou D'Ambrosio. "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."
For the eight weeks ended December 25, the retailer's same-store sales slid 5.2%.
The company expects to take a noncash charge of $1.6 billion to $1.8 billion in the quarter related to a valuation allowance on deferred tax assets.
"Although a valuation adjustment is recognized on these deferred tax assets, no economic loss has occurred as the underlying net operating loss carry-forwards and other tax benefits remain available to reduce future taxes to the extent income is generated," the company said in a statement.
Also, Sears says, the company may see a fourth quarter impairment charge as high as $600 million on some goodwill balances. These charges would be noncash and are estimated to be between $1.6 billion and $2.4 billion.