Sears Holdings began this year with an announcement that it would close 150 stores in 2017, and things have not improved in the months since. The retailer is shuttering 92 underperforming pharmacy operations in certain Kmart stores and 50 Sears Auto Center locations. The company has updated its strategic restructuring program to reflect the closures, increasing its annualized cost savings target from $1 billion to $1.25 billion.
Only seven months after promoting Jason Hollar to take the reins as CFO of its struggling brands, the retailer already has named a replacement. Rob Riecker, originally Controller and Head of Capital Market Activities at Sears Holdings, has been appointed to the position, effective immediately.
Hollar’s resignation from Sears Holdings marks the fourth time a C-level exec has left the company since December 2016. Sears’ EVP Jeffrey Balagna and Sears President and Chief Member Officer Joelle Maher both departed that month, while Kmart President and Chief Member Officer Alasdair James resigned three months later. Given Sears Holdings’ financial nosedive, it’s apparent that even the retailer’s most experienced executives are abandoning ship before it sinks completely.
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Sears appears to be consolidating the leadership structure within the two brands, noting in a statement that it will eliminate certain senior management roles. The company has not specified how many or which roles would be cut.
As part of the restructuring plan, the retailer has saved $700 million thus far in 2017.
“Earlier this year, we initiated a strategic restructuring program and committed to improving our operating performance and financial flexibility in a very challenging retail environment,” Edward Lampert, CEO of Sears Holdings said in a statement. “While we have made significant progress in reducing our cost base and enhancing our member value proposition, we need to take further action.”
The restructuring program is a last-ditch effort to turn around a business that hasn’t made a profit since 2010, losing $10.4 billion within that time frame and incurring $2.2 billion in losses in 2016 alone. Sears Holdings has taken out multiple loans valued at nearly $2 billion from Lampert’s hedge fund, ESL Investments, just to stay afloat.
As a result of the $900 million Craftsman sale and the sale of real estate properties for $177.5 million, Sears Holdings actually expects to report positive net income for Q1 2017, ranging between $185 million and $285 million. This figure excludes the impact of any additional store closure announcements, real estate sales or impairments. Sears has received non-overlapping bids in excess of $700 million on more than 60 separate real estate properties
But both brands’ businesses continue to plummet, signaling more tumultuous times ahead in 2017. Since the beginning of the fiscal year, comparable store sales at Sears and Kmart have declined 11.9% on a combined basis, 10.8% when excluding consumer electronics, compared to the prior year period. The company doesn’t post official Q1 earnings results until May 24, 2017.