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Sears to close stores, sell Craftsman brand

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HOFFMAN ESTATES, Ill. — Sears Holdings Corp. this month announced plans to shut 150 stores and sell its Craftsman tools brand, the company’s latest steps to boost liquidity as it struggles to hang on amid declining sales.

Sears reported that same-store sales at its chains declined by between 12% and 13% in the first two months of the holiday quarter. The retailer has reported just two profitable quarters since April 2012.

Sears also disclosed on January 5 that it had cobbled together more than $1 billion in liquidity through a series of maneuvers that include selling its Craftsman business to Stanley Black & Decker for nearly $900 million and closing 108 unprofitable Kmart stores and 42 underperforming Sears locations. The company also said it plans to raise another $1 billion off of its real estate to further augment its ongoing turnaround effort.

“We are taking strong, decisive actions to stabilize the company and improve our financial flexibility in what remains a challenging retail environment,” Sears Holdings chairman and chief executive officer Edward Lampert said in a statement. “We are committed to improving short-term operating performance in order to achieve our long-term transformation. Going forward, Sears will be more focused on our Shop Your Way membership platform, a network with tens of millions of active members, and our Integrated Retail strategy in order to be a more nimble, innovative and relevant retailer that is better able to provide value and convenience to our customers. We are confident that concentrating on these key initiatives will lay the foundation for growth over the long term.”

The 150 stores that Sears planned to close generated about $1.2 billion in sales over the past year, but also recorded an adjusted loss of roughly $60 million.
“Many of these stores have struggled with their financial performance for years, and we have kept them open to maintain local jobs and in the hopes that they would turn around,” Lampert said. “But in order to meet our objective of returning to profitability, we have to make tough decisions and will continue to do so, which will give our better-performing stores a chance at success.”

The sale of the Craftsman tool brand involves a $525 million payment when the deal closes and another $250 million after three years. Sears will get a royalty on all sales of Craftsman products by other retailers for 15 years, and the right to sell the products royalty free in its stores.


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