Sears is looking to save $1 billion in restructuring

CHICAGO — Sears Holdings Corp. on Friday said it would slash costs by at least $1 billion this year in a restructuring that could mean more job cuts and store closings.

The retailer, headquartered in suburban Chicago, also said it was writing down the value of the Sears name by $350 million to $400 million.

Sears previously announced plans to close 150 of its 1,500 stores nationally by spring, but the company said in a news release Friday that it would “actively manage our real estate portfolio to identify additional opportunities for reconfiguration and reduction of capital operations.” Sears had about 178,000 employees in the U.S. last year.

Sears also plans to consolidate the corporate and support operations of Sears and Kmart into a new organizational model, which may include job cuts, Sears spokesman Howard Riefs said.

“These decisions are never taken lightly, but they are a necessary part of our efforts to become a more competitive retailer and to return our company to profitability,” he said.

Riefs said Sears also intends to identify unprofitable product categories that could be cut to allow the company to focus on categories where it wants to grow, including home appliances and home services.

After signing a $900 million deal to sell its Craftsman brand to Stanley Black & Decker last month, Sears said it continues to look for options for two other popular brands, Kenmore and DieHard, and its Sears Home Services and Sears Auto Centers businesses.

Fourth-quarter sales in stores open at least a year, while down 10.3 percent across both chains, were better than the early holiday results the retailer shared last month. Shares rose 26 percent to close at $6.96 on Friday.

“We believe the actions outlined today will reduce our overall cash funding requirements and ensure that Sears Holdings becomes a more agile and competitive retailer with a clear path toward profitability,” Chairman and CEO Edward Lampert said in a news release.

Lampert, a billionaire hedge fund manager, combined Sears and Kmart in 2005, about two years after he helped bring Kmart out of bankruptcy. But the retail landscape has undergone seismic shifts since then.

While Amazon.com had been up and running for almost a decade at that time, the titanic disruption in retail went into full force around the time of the recession a few years later.

But Sears’ troubles go further than that, having to compete on appliance sales with Home Depot and to match the cut-rate prices at huge chains like Wal-Mart.

And old rivals have made it tougher. J.C. Penney has brought back to its floors major appliances more than 30 years after abandoning the sale of refrigerators and stoves.