Sear Holdings anticipates store sales declines of 7.2 per cent and 6.9 per cent at Kmart and Sears US stores, respectively, and a net loss between US $ 525 million and US $ 625 million in the fourth quarter of the current fiscal year. Categorically stating that the operating performance of its apparel business has “a substantial impact” on its overall profitability, the strategy for revival includes improving the performance of its apparel division.
Sears said it expects fourth-quarter revenues to total US $ 7.3 billion and full-year revenues to reach US $ 25.1 billion. The sales were and will continue to be hurt by historically warm weather and intense competition pressuring margins. Responding to the situation by essentially cutting costs, the retail giant is now working towards optimizing its sourcing networks and pricing strategies, accelerate the closing of unprofitable stores, and implement additional cost savings. Further, the product assortment, space allocation, pricing and inventory management practices will be worked upon.
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The retailer will also optimize store-level marketing expenditures and overall staffing levels, and take action to reduce fixed costs, and to improve inventory management and gross margin realisation. Sears expects to report year-over-year expense reductions of between US $ 135 million and US $ 155 million for the fourth quarter, and for the full year, expects expenses to decline by between US $ 765 million and US $ 790 million.
In addition to the expense and store closing actions, the retailer is targeting at least US $ 300 million from sales of other assets during the first half of fiscal 2016, as it is avoiding incurring debts.