Sears Holdings Corp sales kept falling at the peak of the holiday season, and the retailer said it will close up to 120 stores in its Kmart and namesake chains to focus on stronger stores, sending its shares down more than 19 percent. Sears also said it tapped its credit facility, with $483 million of borrowings outstanding as of December 23, compared to zero a year earlier, and said it expected smaller fourth-quarter earnings this year.
The company's shares were down $8.80 at $37.05. Sales at Sears Holdings, whose chairman and top shareholder is hedge fund manager Edward Lampert, have fallen every year since it was formed through the merger of Sears and Kmart in 2005.
So far this holiday season, the drop has continued.
Same-store sales at Kmart were down 4.4 percent in the current quarter through Christmas Day, and down 6 percent at Sears' US stores. Companywide, they were down 5.2 percent, the company said on Tuesday. Analysts said the store closings were a long time coming.
"It's about time," said independent analyst Brian Sozzi, noting that he expects additional store closings. "They've neglected this business for so long." Sears said that typically, it would keep "marginally performing" stores open to give them time to improve, but "we no longer believe that to be the appropriate action in this environment." The store closings follow its announcement last quarter it would shutter 10 stores. Kmart and Sears have a combined 2,177 US big box locations and another 500 in Canada.