Sears To Close 120 Retail Stores

Shares of Sears Holdings Corp. plunged more than 27 per cent to their lowest levels in three years Tuesday after the department store announced it was closing as many as 120 stores after a miserable holiday shopping season capped several years of strategic blunders amid intensifying competition.

Sears shares fell $12.47 U.S., or 27.20 per cent, to close at $33.38 U.S. on the Nasdaq in New York, the lowest the shares have been since the financial crisis and the biggest one-day decline since 2003. Canadian markets were closed for the Boxing Day holiday. Shares of Sears Canada Inc. closed at $11.56 C on Friday, down 40 per cent so far this year.

A spokesperson for Sears Canada, which installed a new chief executive six months ago, said the company had no plans to close stores in Canada. The company is 94 per cent-owned by Sears Holdings.

Gary Balter, analyst with Crédit Suisse, said Sears has been crippled by a long list of problems, including intense competition from hardware chains The Home Depot Inc. and Lowe’s Cos. Inc. and discount retailers Wal-Mart Stores Inc. and Target Corp., poor brand integration with Kmart after its 2005 merger, failed bets on ventures such as the Kardashian Kollection product line and devalued real-estate holdings due to a lack of in-store traffic.

“This was a company that four years ago was making $3.6 billion U.S. in EBITDA. This year, they’re going to make $400 million U.S. They’re making 10 per cent at a time when everyone else is turning things around,” Balter said on CNBC Tuesday. “Effectively, they’re asking customers to pay for a poorer shopping experience than their competitors and online.”

Sears has done a decent job with its website, but the vast majority of its assets are tied up in the more than 4,000 retail stores in the U.S. and Canada, he said.

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