Sears Holding Corp. (NASDAQ:SHLD) announced that it’s closing its flagship store in downtown Chicago after reporting disappointing holiday sales results earlier this month, according to a report from Crain’s.
This will leave Sears without a store in the downtown area of its hometown. A spokesman from Sears told Crain’s that the store has lost “millions of dollars” since it opened in 2001. “[We] can no longer continue to support the store’s operating losses. The State Street store’s operational performance has been poor through much of its existence,” the spokesman said in an email to the publication.
Crain’s pointed out that other retailers located in Chicago’s Loop district are doing fine and that the overall retail market there is strong. The Sears spokesman told Crain’s that 160 people will loose their jobs as a result of the closing, but that Sears and Kmart will offer the affected employees new positions at other locations.
CEO Edward Lampert said in a blog post Tuesday that the company needs to close more locations as people do more and more of their shopping online, rather than in stores. “The consensus about decreased store traffic also highlights another decision that has steered our work: we very often need less space to serve our members better and we may need fewer locations as well,” Lampert said. “We don’t make decisions to close stores lightly, and we know just how hard these decisions are on our loyal associates who have provided years of excellent service.”
Lampert has made the controversial decision to close both successful and struggling locations, saying that the closings are necessary to give the retailer the cash it needs to more heavily invest in growing its online retail business. Sears has closed about 300 stores in the United States since 2010.
Sears reported at the beginning of the month that it saw comparable-store sales declines at both its Sears and Kmart stores during the holiday shopping season, despite the fact that the retailer opened its doors at 6 a.m. on Thanksgiving to take full advantage of Black Friday shopping.
A retailer’s comparable sales — sales at stores open at least one year — are considered a good indicator for a company’s overall health. Sears reported Thursday that in the U.S., same-store sales were down 9.2 percent in the nine weeks ended January 6. Sales at its discount Kmart chain were down 5.7 percent. Lampert has been working to reverse Sears’ downward spiral since sales started falling at the company in 2005, but it is clear the fruits of the CEO’s labor haven’t paid off yet.
“The results that we posted are not nearly what we want them to be,” Lampert said in a blog post at the time. He also thanked employees for their hard work and tried to boost optimism that the work will eventually pay off. “As it increasingly bears fruit, I am confident that the results of your work will become a clearer part of our overall picture.”
Analysts, however, are not feeling so optimistic about the company’s chances for a turnaround. In December, Sears spun off Lands’ End, one of its last profitable businesses, in order to return some cash to investors. A Belus Capital Advisors analyst told Reuters at the time: “Sears is in a steady state of decline. They’re essentially selling their body parts so they stay alive today.”
The closing of its flagship store in a location that has supported an otherwise successful retail climate won’t help raise the confidence of analysts or investors despite Lampert’s claims that the company is moving into the more profitable space of online retail.
More from Wall St. Cheat Sheet:
- Sears Bleeds Red From Holiday Shopping Season
- Sears’ Lampert Spins Off Land’s End, Not Analyst Doubt
- Sears Canada Rings Up More Job Cuts
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