Is Kmart going out of business? Throughout most of the year, rumors have been circulating among business reports and store employees that the retail chain will soon close all of its doors. Kmart closing its doors for good could lead to thousands of employees being laid off.
Now, the Sears Holdings CEO is firing back at those “false and exaggerated” rumors that Kmart is closing its stores nationwide. However, things aren’t looking good for Sears since its stock has plummeted more than 35 percent this year, reports WHNT 19 News. Chapter 11 bankruptcy rumors have plagued Sears for some time now. There were rumors that Sears plans to file for bankruptcy in 2017 or 2018 if sales don’t get any better.
Ever since Kmart and Sears merged in 2004, the stores have been struggling even more. That same year, Kmart’s sales plunged from $37 billion to $10 billion. There are even rumors that Sears may even distance themselves from the Kmart franchise, but CEO Eddie Lampert wants to shut down the rumors. Lampert wanted to reassure both investors and customers on Monday, Oct. 3 in a post on the Sears corporate blog.
“I can tell you that there are no plans and there have never been any plans to close the Kmart format,” he wrote. “In fact, we’ve been working hard to make Kmart a more fun, engaging place to shop, powered by our integrated retail innovations and Shop Your Way. To report or suggest otherwise is irresponsible and is likely intended to do harm to our company to the benefit of those who seek to gain advantage from posting this inaccurate reports.”
Lampert posted the blog article amid multiple reports from Wall Street analyst insisting that Kmart and Sears are nearing bankruptcy. In addition, Kmart employees have expressed their concern over the future of the retail chain. Fitch Ratings identified Sears as one of the major retailers at the brink of going bankrupt in the next 12 to 24 months, leading to a possible liquidation. Lampert refutes the rumors, saying that the company is doing what they can to “restore profitability.” However, he added, “we won’t be able to restore profit immediately.”
“We are working to restore the company to profitability,” Lampert reassured his investors on his company blog, reports Business Insider. “We are focused on executing our plan and establishing a foundation from which Sears Holdings can grow for years to come.”
Sears announced back in August that its cash and equivalents had fallen to $276 million from $1.8 billion one year ago. Due to this, the retailer was forced to accept $300 million in financing from Sears CEO Eddie Lampert’s hedge fund, ESL Investments, in the recent quarter. The company continues to lose money as sales plunge at both Sears stores and Kmart stores.
Net sales dipped to 8.8 percent to $5.7 billion in the second quarter. Same-store sales plunged down to 7 percent at Sears stores and 3.3 percent at Kmart stores. Sales have been on the decline for years. Sears has closed 80 stores this summer – most of which were Kmart stores – and announced that 64 more stores would close by the end of this year.
But, Lampert denied that the store closures are a sign that both Sears and Kmart plan to close its doors for good. In fact, the closure is part of Sears’ plans to restore profitability, according to the CEO.
“We have been clear that we are intent on improving the performance of our unprofitable stores and, if we cannot, we will close them,” Lampert said. “We are acting more aggressively and continuing to evaluate stores as leases expire and as other opportunities present themselves that improve the economics of Sears Holdings.”
Sears Holdings’ sales may have declined in recent years, but some of its assets are still on the rise, reports Fortune. The retailer’s stock rose 20 percent on Tuesday after Bloomberg reported Sears’ Craftsman tool brand had attracted bidders such as Stanley Black & Decker and Hong Kong’s Techtronic Industries. Bloomberg also reported that the business could be well worth over $2 billion.
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