Kmart Shoots Down Reports Sears Is Closing It Down

July 27, 2016, 5:50 PM UTC
Shoppers Inside A Kmart Store Ahead Of Black Friday Sales
A shopper stands with an empty shopping cart in the toy aisle of a Kmart discount store, operated Sears Holdings Corp., ahead of Black Friday in Frankfort, Kentucky, U.S., on Thursday, Nov. 27, 2014. An estimated 140 million U.S. shoppers are expected to hit stores and the Web this weekend in search of discounts, kicking off what retailers predict will be the best holiday season in three years. Photographer: Luke Sharrett/Bloomberg via Getty Images
Photograph by Luke Sharrett — Bloomberg via Getty Images

Media reports that Kmart is slowly going out of business via stealth liquidation sales have clearly struck a nerve with parent company Sears Holdings(SHLD)

The company published a blog post on Wednesday seeking to debunk claims that Kmart is getting ready to shut down after a Business Insider article last week said, citing employees, that the company was purging warehouses and putting all stock out on the sales floor in what could seem tantamount to close-out sales.

The retailer, which only 25 years ago was larger than Walmart (WMT) but whose revenue is now not even 4% that of its rival ($10 billion last year to Walmart U.S.’s $280 billion), said changes to how it stocks shelves are simply aimed at improving efficiency and speeding up checkout.

“Our store associates are currently rolling out a phased project that gets our newly-delivered products on the stores’ shelves immediately rather than in the stock rooms and ensuring that the member does not wait in line at the checkout,” Alasdair James, president and chief member officer for Kmart, and Gareth Glynne, Head of Kmart Retail, wrote in the blog post.

It’s easy to see why the idea of Kmart being closed down by Sears Holdings could take hold: the chain has been shrinking for years and closed hundreds of stores, shriveling even more quickly than its struggling sister chain, the Sears department store chain. The retailer is on many analysts’ bankruptcy watches.


In April, it announced the latest round of shutterings. Kmart’s store count now stands at about 900, down from 1,300 or so only five years ago. Meanwhile Kmart’s comparable sales, which strip out the drag of weak stores that have closed, fell in each of the last five years, and again in the first quarter of the current fiscal year. Sears Holdings has lost $8 billion in last five full fiscal years.


Still, as Kmart’s brass quickly pointed out, the retailer hasn’t packed it in. Among other moves, it announced a clever new marketing plan that would emphasis fun and bring more liveliness to its drab stores, including giving store workers t-shirts with the iconic tagline “Attention Kmart Shoppers.” Last year, Kmart brought back its famous surprise Bluelight Special sales.

Nonetheless, Sears Holdings is undeniably hurting. In May, soon after reporting yet another quarter of deep losses it said it was considering options to squeeze much needed money out of its most attractive remaining assets after years of selling off things like its Sears Canada stake and Lands’ End clothing brand : its Kenmore, Craftsman, and DieHard appliance and tools.

And in that context, it’s not surprising if employees see any major change in procedures as a precursor of doom.

The Kmart executives felt compelled to reassure investors and employees that “Sears Holdings is highly focused on restoring profitability to the company and Kmart remains a key part of our asset portfolio.”

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