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HOFFMAN ESTATES, Ill. — Store closings and continued weak sales performance in its Kmart division has led to speculation that Sears Holdings Corp. may end up pulling the plug on the discount store chain. The ratings agency Moody’s last month cut its rating on Sears debt and said the move partly reflected “our uncertainty of the viability of the Kmart franchise in particular given its meaningful market share erosion.”
Sears chairman and chief executive officer Eddie Lampert addressed the issue in a blog post on Monday, calling rumors of Kmart’s imminent demise untrue.
“Recent reports have suggested that Kmart will cease its operations,” Lampert wrote. “I can tell you that there are no plans and there have never been any plans to close the Kmart format. In fact, we’ve been working hard to make Kmart a more fun, engaging place to shop, powered by our integrated retail innovations and Shop Your Way. To report or suggest otherwise is irresponsible and is likely intended to do harm to our company to the benefit of those who seek to gain advantage from posting these inaccurate reports.”
Lampert pointed out that Kmart continues to operate more than 700 stores, and said that many of them are profitable. For those that are unprofitable, Lampert said, the company is determined to either improve their performance or close them.
“We are acting more aggressively and continuing to evaluate stores as leases expire and as other opportunities present themselves that improve the economics of Sears Holdings,” Lampert wrote.
He added that at the end of the process, Sears expects to end up with a large chain of stores, some owned and some leased, and with a company focused on serving its customers through its Shop Your Way membership rewards program, both in stores and online.
“We are working to restore the company to profitability,” he said. “Our significant asset base gives us the wherewithal to fund our business, but we don’t intend to use our asset value to support losses. Focusing on our best members, best stores and best categories means a smaller overall store footprint, and one that still represents one of the largest number of stores and square footage in the United States. We have a process underway to create value by positioning our Kenmore, Craftsman and DieHard businesses as well as our Sears Home Services business to benefit from broader distribution and partnerships that will allow them to grow beyond Sears Holdings. We also possess a significant portfolio of real estate assets with an opportunity to create value through improving our retail productivity and by monetizing them in a variety of ways.
“While the retail environment generally has been challenging and we won’t be able to restore profit immediately, we are focused on executing our plan and establishing a foundation from which Sears Holdings can grow for years to come. It isn’t easy and there will be bumps along the way, but we have tens of thousands of hard working men and women dedicated to transforming the company and making our members lives better and easier every day.”