Sears Holdings Corp. warned Tuesday that its fourth-quarter revenue would fall short of expectations, prompting the retailer to accelerate store closures and make deeper cost cuts.
Shares in the company, down 49% over the past 12 months, declined 3.4% in premarket trading.
The Hoffman Estates, Ill.-based retailer, which has been struggling to transform itself and return to profitability, said it expects to report $7.3 billion in sales for the quarter ending Jan. 30, down from $10.59 billion a year earlier and below the $7.43 billion analysts polled by Thomson Reuters have projected. Sales at existing stores dropped 7.1% in the quarter, pushed lower by a 6.9% drop in domestic Sears stores and a 7.2% decrease in Kmart locations.
"The holiday selling season proved to be challenging," Sears said, with warm weather and "intense competition" pressuring margins and driving sales declines, particularly in its apparel segment.
Based on the disappointing performance during the quarter, Sears said, it will speed up the shuttering of unprofitable stores and look to further reduce costs. The company has recently flagged 50 stores for closure in the coming months and suggested Tuesday that it may raise that number. It also said it is targeting at least $300 million of other asset sales during the first half of its 2016 business year?including a possible sale or partial divestiture of its Sears Auto Center business, which it had previously said it was evaluating.
The company added that it is evaluating overall staffing levels but stopped short of announcing layoffs. Steps announced Tuesday would shave an additional $550 million to $650 million off of expenses, Sears said.
Sears isn't alone in announcing cost-cutting actions in the face of a disappointing holiday shopping season. Macy's Inc. last month said it would slash thousands of jobs, re-examine its real estate holdings in markets including New York and San Francisco, and close 40 stores. Wal-Mart Stores Inc., meanwhile, said it would close 269 locations globally.
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