The holiday season was a challenging time for Sears Holdings thanks to warmer than usual temperatures that hindered winter clothing sales and "intense competition pressuring margins."
February 9, 2016
The holiday season was a challenging time for Sears Holdings thanks to warmer than usual temperatures that hindered winter clothing sales and “"ntense competition pressuring margins."
"The operating performance of our apparel business has a substantial impact on our overall profitability, and, in 2016 and future periods, we intend to improve the performance of our apparel business through changes to our sourcing, product assortment, space allocation, pricing and inventory management practices," states Sears in an announcement regarding fourth quarter performance.
Sears predicts total revenues of $7.3 billion and $25.1 billion for the fourth quarter and full-year of 2015, respectively.
"Our fourth quarter comparable store sales showed an improvement from the trend in the first three quarters, and January 2016 was our best monthly comparable store sales performance of the year (-4.5 percent)," notes the announcement.
The retailer stated that its apparel business had a "substantial" impact on overall profitability and that going forward, as of 2016, it will focus on the apparel business and make adjustments to sourcing, product assortment, space allocation, pricing and even inventory management practices.
Sears plans to close unprofitable stores, likely about 50, in the next few months and will be assessing its cost structure, from marketing to staffing. It is hoping to costs by between $550 million and $650 million, depending on the overall volume of sales. It is also mulling selling off part or all of its Sears Auto Center business.
"Our intention is not to borrow money to fund continued operating losses, but instead to provide us flexibility as we transition from a traditional network based model to a more asset light member-centric integrated retailer leveraging our Shop Your Way program," states the announcement.
It will present financial results for its fiscal 2015 fourth quarter and full year on Feb. 25.
