Sears to close 40 more stores; 2 in South­land

Te­mec­ula and Santa Bar­bara lo­ca­tions are among those to be shut by Fe­bru­ary.

Los Angeles Times - - BUSINESS BEAT - BY SAM DEAN sam.dean@la­times.com

Sears Hold­ings Corp. is clos­ing 40 ad­di­tional Sears and Kmart stores by Fe­bru­ary, in­clud­ing two in South­ern Cal­i­for­nia, the com­pany an­nounced this week.

The an­nounce­ment comes less than a month af­ter the com­pany — once the United States’ dom­i­nant re­tailer — filed for Chap­ter 11 bank­ruptcy. Since the Oct. 14 bank­ruptcy fil­ing, Sears has an­nounced 182 store clo­sures.

Two of the stores set to close by Fe­bru­ary are in Cal­i­for­nia: the Sears at La Cum­bre Plaza in Santa Bar­bara and the Kmart at 26471 Ynez Road in Te­mec­ula. All told, the com­pany has an­nounced the clo­sure of 18 Sears and Kmart stores in the state since its bank­ruptcy fil­ing.

Liq­ui­da­tion sales at the stores shut­ting by Fe­bru­ary will be­gin late next week, and Sears Auto stores at th­ese lo­ca­tions will also close, the com­pany said.

Sears’ bank­ruptcy fil­ing came af­ter decades of de­cline. In the last five years, it posted losses of $6.8 bil­lion as an­nual sales plum­meted from $36.2 bil­lion in fis­cal 2013 to just $16.7 bil­lion in fis­cal 2017.

Un­der the man­age­ment of hedge-fund bil­lion­aire Ed­ward Lam­pert — who re­mains the com­pany’s ma­jor­ity stock­holder and ma­jor cred­i­tor af­ter step­ping down as its chief ex­ec­u­tive in the wake of the bank­ruptcy fil­ing — Sears slashed its re­tail foot­print and work­force in an ef­fort to keep afloat as sales de­clined.

Since 2013, the Hoff­man Es­tates, Ill., com­pany has closed more than 1,000 stores and cut its work­force from 226,000 em­ploy­ees to 89,000 this Fe­bru­ary, a num­ber that con­tin­ues to de­cline as ad­di­tional stores shut their doors.

The com­pany also sold off many of its most valu­able as­sets in or­der to raise cash. In 2014, Lam­pert spun off the cloth­ing man­u­fac­turer Land’s End into a sep­a­rate com­pany, be­com­ing its big­gest share­holder. In 2015, he sold 235 of the com­pany’s prime re­tail lo­ca­tions to Ser­itage Growth Prop­er­ties, a real es­tate in­vest­ment trust he cre­ated for the deal, rais­ing $2.7 bil­lion for Sears Hold­ings in the process. And last year, Sears sold its Craftsman tool brand to power-tool com­pany Stan­ley Black & Decker for $900 mil­lion.

But it wasn’t enough. As part of its bank­ruptcy pe­ti­tion, Sears’ banks agreed to pro­vide a so-called debtorin-pos­ses­sion loan of $300 mil­lion, and is ne­go­ti­at­ing an ad­di­tional $300 mil­lion in fi­nanc­ing from Lam­pert’s hedge fund, ESL In­vest­ments Inc., to help keep the com­pany alive as it re­struc­tures.

Lam­pert has said that the sto­ried re­tail chain still “has a fu­ture” as a smaller, less-in­debted com­pany. But as the for­mer re­tail king­pin’s big-box body count con­tin­ues to climb, an­a­lysts told The Times that Sears runs the risk of go­ing the way of Toys R Us Inc., which had hoped to re­or­ga­nize un­der Chap­ter 11 but ended up liq­ui­dat­ing this year.

Scott Ol­son Getty Images

SINCE THE bank­ruptcy fil­ing, Sears has an­nounced 182 store clo­sures. Above, the last Sears in Chicago.

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