Suzette Parmley/The Philadelphia Inquirer – Even as Sears Holdings Corp. announced 66 more store closings this week, experts say more are in the offing.
Sears’ announcement involve 49 Kmart and 17 Sears stores nationwide. Three are in South Jersey: a Sears in Vineland, and Kmarts in Mantua, Gloucester County, and Manahawkin, Ocean County.
Three Kmarts in western Pennsylvania – in Belle Vernon, Indiana, and Butler — also will close. No Sears stores in Pennsylvania will be affected in this round of cuts, and no Kmarts or Sears will close in Delaware.
The closings come on top of 150 stores that the company closed this spring and are part of the beleaguered retailer’s ongoing effort to get out of the red. Sears’ store count has plummeted from a high of 4,010 at the end of 2011 to just 1,275 at the end of April 2017.
“Sears is on life support with very limited turnaround prospects on the horizon,” said Ken Perkins, president of Retail Metrics Inc., which tracks the retail industry for investors. “This most recent announcement of 66 more store closures is just another installment of what has been and is likely to be continued decline.”
Perkins said the once-iconic department store has had just one quarter of positive same-store sales growth in the last 12 years. Sears has not turned an operating profit in over four years and has managed just eight profitable quarters in the last 37.
Sears’ cumulative loss since 2008 has been $3.9 billion, according to Retail Metrics.
“There could be additional closings this year.” warned a company source who asked not to be identified, since he was not authorized to speak to the media. “These planned closings are part of our operational restructuring and consistent with our objective of returning to profitability.
Sears’ predicament is part of the general decline of the department store sector, which lacks the infrastructure and distribution network to compete with the likes of Amazon and other online players.
Four Macy’s stores shut in the Philadelphia region at the end of March, while three JCPenney stores, at King of Prussia, Willow Grove, and Philadelphia Mills malls, are set to close on July 31.
Since 2012, Pennsylvania Real Estate Investment Trust (PREIT), which owns several malls in the region, has reduced the number of Sears and Kmart stores in its portfolio from 27 to 11. At Exton Square Mall in Chester County, construction continues on a Whole Foods which will replace a former Kmart.
“Although the slew of store closings isn’t the end of Sears altogether, they certainly indicate that the company is even further on the way out,” said Madeline Hurley, senior analyst at IBIS World Inc. “Over the five years to 2017, Sears’ revenue is expected to fall at an annualized 10.1 percent, compared with an annualized 4.0 percent decline in the department industry as a whole.
“The deterioration of both Sears and the department store industry is largely due to surging e-commerce spending and the failure to compete with off-price brick-and-mortar stores.”
Liquidation sales start Thursday for the targeted Kmarts on the list of 66, while Sears liquidation sales will start Friday. All 66 stores are to close by early September, according to the company.
The closings will leave 25 Sears stores in the Philly region, including a pair (such as a department store and auto center) each in Northeast Philly, Bensalem, Media, Norristown, and North Wales; and 16 in South Jersey, including a pair each in Burlington, Deptford, Mays Landing, Moorestown, and Ocean. The closings will also leave 14 Kmarts in the Philadelphia region and a half-dozen Kmarts in South Jersey.
Phoenix-based Jeff Green, who consults with national retailers on long-term strategy, gave some advice to mall owners who still have a Sears.
“All mall-owners with Sears as an anchor should be thinking about the redevelopment of such a box,” Green said Friday. “If Sears owns the real estate on which the box resides, ownership options [potential buyouts] must be considered.
“I have been saying that Sears would close more stores this year, and the latest 66 are still just a small percentage of the total of what will be announced by Sears as store closures in 2017,” he added. “Expect another round of announcements after back-to-school, if not sooner.”