After a disastrous holiday shopping season, the parent company of Sears and Kmart will close at least 100 stores to raise cash -- a move that sparked speculation about whether the 125-year-old retailer can avoid a death spiral fed by declining sales and deteriorating stores.
Sears Holdings Corp., a pillar of American retailing that famously began with a mail-order catalog in the 1880s, said Tuesday that it would no longer prop up "marginally performing" locations. The company pledged to refocus its efforts on stores that make money.
Sears' stock quickly plunged 12.47 points, or 27.2 percent, to close at 33.38 Tuesday.
Sears has yet to determine which stores will close; it would not discuss how many, if any, jobs would be cut. The projected closings represent only about 3 percent of Sears Holdings' 3,560 U.S. stores.
The closings are the latest and most visible move by Eddie Lampert, the hands-on chairman who has struggled to reverse the company's fortunes.
As rivals Wal-Mart Stores Inc. and Target Corp. spruced up stores in recent years, Sears Holdings struggled with falling sales and perceptions of dowdy merchandise. Some analysts wondered if it was already too late, questioning whether the retailer can afford to upgrade stores as it burns through its cash reserves.
The sales weakness "begins and some would argue ends with Sears' reluctance to invest in stores and service," Credit Suisse analyst Gary Balter wrote in a note to clients.
"There's no reason to go to Sears," added Manhattan-based independent retail analyst Brian Sozzi. "It offers a depressing shopping experience and uncompetitive prices."
Sears and Kmart were both retail pioneers. Sears' catalog and department stores were fixtures of American life stretching back to the 19th century before being hurt in recent years by competition from steep discounters and by missteps that included forays into financial services and the sell-off of a lucrative credit card business.
Kmart helped create the discount-store format that Wal-Mart Stores Inc. came to dominate.