Sears to slash 400 jobs, on track for $1.25bn savings
US retail giant Sears Holdings Corp has revealed the next steps in its transformation plan, including cutting a further 400 jobs, despite assurances it is on track to deliver on its US$1.25bn savings target.
In an update today (13 June), CEO Edward Lampert said combined with the restructuring actions announced since the beginning of the fiscal year, Sears Holdings has actioned nearly $1bn in annualised cost savings to date, and is on track to deliver its $1.25bn goal.
In February, Sears initially announced plans to cut around US$1bn in costs in a move designed to drive efficiencies in pricing, sourcing and the supply chain.
However, just two months later, and despite making what it called significant progress in reducing its cost base, Sears announced it would be taking "further action" by cutting an additional $250m in costs across its operations and naming a new chief financial officer.
Now, Lampert says the next steps of the restructuring programme include the elimination of about 400 full-time positions at the company's corporate offices and support functions globally, in addition to certain positions at its field operations as well as the store closures it initiated last week. "We are making progress with the fundamental restructuring of our operations that we initiated in February," he says. "We remain focused on realigning our business model in an evolving and highly competitive retail environment. This requires us to optimise our store footprint and operate as a leaner and simpler organisation."
The majority of the positions due to be slashed are related to the corporate workforce at Sears Holdings' headquarters in Hoffman Estates.
"While the total number of people who are directly affected represents a small fraction of our total headcount, we are conscious of the impact on individual employees," the company says.
Sears adds it is providing eligible associates with severance compensation and transition assistance, and says the company first eliminated open positions and reduced contract employees in an effort to "minimise the impact on full-time employees".
Meanwhile, the company says since the beginning of the calendar year, it has paid about $418m of term loans outstanding under its revolving credit facility; extended the maturity of $400m of its $500m 2016 secured loan facility up to 12 months; entered into an agreement with Metropolitan Life Insurance Company (MLIC) to annuitise $515m of pension liability to reduce the overall size of the company's pension plan, future cost volatility and plan administrative expenses; monetisation of certain real estate properties that generated over $200m in proceeds; and the continued growth of its Shop Your Way ecosystem through strategic partnerships and value offerings, including recently announced partnerships with Citi and Time Inc.
Looking ahead, Sears says it will continue to take all necessary action to meet its savings target, focusing all investments on it "valuable assets", such as Shop Your Way, Kenmore, Craftsman, and DieHard brands, Sears Home Services, and Sears Auto Centres.
"We continue to evaluate strategic options across our portfolio to unlock value from our assets through partnerships, joint ventures or other means," it adds.
Sears recently moved to a profit in its first-quarter, with net income reaching $244m, compared to net loss of $471m in the year-ago period.