Sears Holdings Corp. (SHLD:US) plans to close its money-losing namesake location in downtown Chicago, reducing its physical presence in the city as it shrinks its store network and divests assets amid a decline in sales.
Sears will shutter the store at 2 N. State St. in Chicago’s Loop business district in April, Howard Riefs, a spokesman, said yesterday in an e-mail. The store employs about 160 mainly part-time staff and those eligible will receive severance and be able to apply for positions in the company’s other stores in the Chicago area, he said.
“The store has lost millions of dollars since opening and we can no longer continue to support the store’s operating losses,” said Riefs.
The closing will end Sears’s presence in Chicago’s prominent shopping and business district as the retailer moves to cut expenses and raise cash. Sears’s stock dropped the most in more than a year on Jan. 10, after it forecast a fourth-quarter loss and said sales during the holiday period dropped.
The company’s departure from State Street contrasts with its once-dominant presence downtown. The Sears Tower, the city’s tallest building, changed its name to Willis Tower in 2009 after insurance broker Willis Group Holdings moved in. The 40-year-old tower once housed the retailer’s headquarters before it moved to its current location in Hoffman Estates.
“We very often need less space to serve our members better and we may need fewer locations as well,” Chief Executive Officer Edward Lampert wrote in a blog posting yesterday. “This is true of our competitors too.”
Lampert, who is also Sears’s largest shareholder, has been selling assets to shore up the company’s balance sheet while focusing investments on its digital operations and Shop Your Way rewards program. Last year, Sears announced plans to separate the Lands’ End clothing unit and its auto-service centers.
Sears rose 0.7 percent to $37.85 at the close in New York yesterday. The shares have declined 23 percent this year.
The company forecast a loss in the fourth quarter of $250 million to $360 million, or $2.35 to $3.39 a share, Sears said Jan. 9. That compares with a net loss a year earlier of $489 million, or $4.61 a share. Sales at stores open at least a year fell 5.7 percent in the current quarter through Jan. 6 at Kmart stores and 9.2 percent at U.S. Sears stores for a companywide decline of 7.4 percent, the company said.
Sears will report full fourth-quarter results on or about Feb. 27.
The company’s first downtown Chicago store opened in 1932 on State Street and 15,000 customers visited on opening day under a 72-foot long electric sign at the entrance, according to the company’s website. Merchandise included tractors and tombstones.
The current store on State Street opened in 2001, Riefs said. Sears will continue to lease space in the building’s fourth floor where more than 150 employees work in its online and information technology units. Three Sears stores will remain within the city limits, Riefs said.
The retailer had 2,018 U.S. Sears and Kmart stores as of Nov. 2.
The store closing was reported earlier by Crain’s Chicago Business.
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