If all the news about increased holiday shopping had you feeling warm and fuzzy about the American retail sector, you might want to go grab a nice blanket. Kmart announced today that it would close between 100 and 120 of its 4,000 North American stores because of how badly they performed during the holiday shopping season.
The Associated Press reported Tuesday morning that the retail giant hasn’t decided which stores it would close, but did say that it has its eye on “marginally performing” stores — meaning stores that had less-than-stellar sales between now and Black Friday. This period of heavier than usual shopping normally means gains for big stores like Kmart, but Sears (which owns Kmart) says that wasn’t the case this year.
“Given our performance and the difficult economic environment, especially for big-ticket items, we intend to implement a series of actions to reduce ongoing expenses, adjust our asset base, and accelerate the transformation of our business model,” said CEO Louis D’Ambrosio. “These actions will better enable us to focus our investments on serving our customers.”
While Sears would not say how many jobs would be lost, it did say the store closings would generate between $140 million and $170 million after inventory from those stores is sold off. And while the news is sad, it’s not surprising — the company had already planned to close a number of stores this year, but as far as we can tell this is the first time they put an actual figure on it.
The store cites declining sales among middle-income customers as one of a myriad of reasons sales have been down this year, including losing some customers to other big retailers like Target and Macy’s. It’ll be interesting to see if offering fewer stores with (hopefully) better service will help put Kmart back in the black.