US retailer Sears said Tuesday it would close 100 to 120 of its Sears and Kmart stores and warned fourth-quarter earnings before charges would drop by at least half to $466 million due to lower sales and margins.
"Given our performance and the difficult economic environment, especially for big-ticket items, we intend to implement a series of actions to reduce on-going expenses, adjust our asset base, and accelerate the transformation of our business model," chief executive Lou D'Ambrosio said in a statement.
The measures would generate up to $170 million in cash, it said.
Reporting a 5.2 drop in quarterly sales to date, it said quarterly adjusted earnings before interest, taxes, depreciation and amortisation (EBITDA) would be less than half the $933 million registered last year.
The retailer said sales in Kmart stores in the final quarter to Christmas were down 4.4 percent, and down by 1.8 percent in the year to Christmas, reflecting decreases in consumer electronics and apparel categories and lower layaway sales.
For Sears Domestic stores the drops were 6.0 percent and 3.3 percent, with the decline due to lower consumer electronics and home appliance sales. Apparel sales were flat and Lands' End shops located in Sears stores saw mid-single digit growth.
Sears said it expects to take between $1.6 and $2.4 billion in non-cash charges in the final quarter relating to valuation on deferred tax assets and impairment charges on some goodwill balances.
The company said in addition to the store closures it said it plans to reduce peak store inventory next year by $300 million and reduce fixed costs by $100 to $200 million.