Sears Holdings Corp (NASDAQ:SHLD) Closing Over 50 stores

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Sears Holdings Corp (NASDAQ:SHLD) is in the process of closing more than 50 stores as part of its slimming measures. The retailer that also operates Kmart stores has shuttered hundreds of stores in the recent years as it seeks to preserve cash and raise more funds. In addition to store closures, Sears has also been selling some of its assets.

It seems modernization of Sears Holdings Corp (NASDAQ:SHLD) is going to be long, winding and painful. The retailer is working towards a transformation agenda aimed at increasing its online presence and reducing its physical store exposure. Towards that end, the company has been trimming the number of both its namesake Sears stores and Kmart stores. Over the last five years, the number of Sears branded stores has dropped to 708 from 868. In the same period, Kmart branded stores have come down in number to just 950 from 1,309.

50 more stores to go

Despite the hundreds of store closings, Sears wants to drop more stores. In the latest wave of closing, the retailer is targeting to close more than 50 physical stores.

It is not clear at this point how many of Kmart or Sears branded locations are targeted in the latest slimming case.

Shrinking sales

Sears Holdings Corp (NASDAQ:SHLD) is looking to drop more retail locations from its portfolio at a time when it has emerged that its sales continue to decline. The company reported holiday comp sales descended 7.2% at Kmart and 6.9% at Sears. That placed Sears is the worst holiday quarters performer among its peers.

Raising cash

The closure of more stores is both designed to simplify operations and preserve cash. As part of raising more funds to bank roll its turnaround, Sears Holdings Corp (NASDAQ:SHLD) is also selling off certain assets. The company generated $2.7 billion in 2015 from the sale of its store locations.

If Sears Holdings Corp (NASDAQ:SHLD) can’t have enough of the funds it needs for its transformation store closure and asset sales may continue.

Moves Come On Heels of Fourth Quarter Update

Sears released a fourth quarter update on February 9th, in which it reiterated they remain committed to returning the company to profitability.  They reiterated that the company is take further actions to accelerate their transformation which is focused on Shop Your Way Membership and integrated retail. The update noted that they would be making dramatic changes to their apparel business, and expense reductions for 2016 of $550 to $650 million. The expense reductions will be apart of the effort to close unprofitable stores and the overall evaluation and optimization of their cost structure. This will include staffing levels and store-level marketing expenditures in addition to inventory management and gross margin realization.

Number one focus Positive Adjusted EBITDA for 2016

The company’s number one focus is generating positive adjusted EBITDA for 2016. This should come as no surprise since the financial update for the Fourth Quarter noted that they would lose between 50 and 100 million for the fourth quarter in adjusted EBITDA. This was another step backwards for the retailer as the company reported $125 million of adjusted EBITDA in the fourth quarter of 2014.

Neha Gupta

Neha Gupta has been in the financial space for over six years now. Gupta earned her MBA degree from Symbiosis Centre of Distance Learning in 2009 and her passion for finance led her to pursue Chartered Financial Analyst (CFA) course. She has successfully completed Level II of her CFA. She is a veteran in article writing, which is depicted in her numerous pieces published on SeekingAlpha, Nextiphonenews, InsiderMonkey, MarketWatch, and Techinsider. Her crisp and eloquent writing finds its best place in Researchcows, where emphasis is given on developing rich content for various websites, products, business plans, trainings, and book writing.

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