Sears Holdings expects store closure to reduce expenses
27 Dec '11
4 min read
• Excluding the effect of store closures, we currently expect to reduce 2012 peak domestic inventory by $300 million from the 2011 level of $10.2 billion at the end of the third quarter as a result of cost decreases in apparel, tighter buys and a lower inventory position at the beginning of the fiscal year. • Focus on improving gross profit dollars through better inventory management and more targeted pricing and promotion. • Reduce our fixed costs by $100 to $200 million.
In addition to the specific store closures listed above, we will carefully evaluate store performance going forward and act opportunistically to recognize value from poor performing stores as circumstances allow.
While our past practice has been to keep marginally performing stores open while we worked to improve their performance, we no longer believe that to be the appropriate action in this environment.
We intend to accentuate our focus and resources to our better performing stores with the goal of converting their customer experience into a world-class integrated retail experience.
We currently expect the store closure and inventory reduction actions to reduce peak inventory in 2012 by $500 to $580 million and reduce our peak borrowing need by $300 to $350 million in 2012 from levels that may have resulted in 2012 without such actions.
At December 23rd, we had $483 million of borrowings outstanding on our domestic revolving credit facility leaving us with over $2.9 billion of availability on our revolving credit facilities ($2.1 billion on our domestic facility and $0.8 billion on our Canadian facility). There were no borrowings outstanding last year at this time.
During the fourth quarter through December 23, 2011, we have not repurchased any of our common shares under our share repurchase program. As of December 23, 2011, we had remaining authorization to repurchase $524 million of common shares under the previously approved programs.
Fourth Quarter Earnings Release The company currently plans to release financial results for its fiscal 2011 fourth quarter and full year on or about February 23, 2012, before the market opens.