Transformco, the shell company that bought bankrupt retailer Sears Holdings Corp. earlier this year, disclosed late Thursday that the "difficult retail environment and other challenges" have led to the decision to close an additional 96 stores by Feb. 2020.
Following the closures (51 Sears and 45 Kmart stores), Transformco will operate only 182 stores, a 57% decline of its Sears and Kmart footprint from 1Q19 of 425 stores.
The latest 96 closures are in addition to the 100 stores we reported last month.
In 2014, Sears operated 2,000 Sears and Kmart stores across the country have seen significant declining sales as consumer trends evolve to more e-commerce shopping.
"Since purchasing substantially all the assets of Sears Holdings Corporation in February 2019, Transformco has faced a difficult retail environment and other challenges. We have been working hard to position Transformco for success by focusing on our competitive strengths and pruning operations that have struggled due to increased competition and other factors. To support these initiatives, our owners (along with a third-party investor) have recently provided the company approximately $250 million in new capital.
As part of this process, we have made the difficult but necessary decision to streamline our operations and close 96 Sears and Kmart stores. Going out of business sales at these stores are expected to begin on December 2.
Following these closures, Transformco will operate 182 stores. We will continue to evaluate our Sears and Kmart footprint, consistent with our overall retail and service strategy," the statement read.
Financier Edward Lampert, also the former CEO of Sears, established Transformco and purchased the company out of bankruptcy, with plans to turn it around.
Lampert acquired 223 Sears and 202 Kmart stores, the Kenmore and DieHard brands, for approximately $5.2 billion.
The newly acquired assets were put into Transformco, which didn't have $4 billion in debt and pension obligations the parent company had.
About 50% of the stores in the new company were profitable in 1Q19.
But by late summer into early fall, the profitability of at least 25% of the 425 stores collapsed, forcing Transformco to close 100 stores last month, and 96 more by Feb. 2020.
Here are the latest store closings:
As for the overall retail space, our report from Sept. specified how 2019 store closures already outpaced all of 2018. And to make matters worse, it's likely the consumer will underperform this holiday season, adding to further stress for retailers.