Hoffman Estates, IL, Aug. 29--Sears, Roebuck & Co. said Thursday that it plans to close three underperforming Great Indoors home-decorating stores, convert a fourth to an outlet format, and record related charges in its third quarter.
Closing the Great Indoors stores in Arlington and Willowbrook, TX, and in Cincinnati will leave 18 Great Indoors stores in 11 markets across the nation. The store to be converted to an outlet store is in Shelby, MI. Sears expects to complete the closings by the end of the year.
The charge for the fiscal third quarter, ending in late September, will amount to $75 million to $100 million. A company spokesman said Sears hasn't calculated the per-share impact of the charge.
Sears did say the charge isn't included in its latest earnings estimate for the current fiscal year. In mid-July, Sears lowered its outlook for full-year earnings per share to a range of $4.80 to $5, excluding any impact from the sale of its credit-card business to Citigroup Inc. The retailer's previous forecast was for earnings of $4.95 to $5.15 a share. In the previous fiscal year, Sears earned $1.4 billion, or $4.29 a share.
Analysts are looking for earnings of $4.74 for the year, excluding items, according to Thomson First Call.
The retailer's goal for The Great Indoors is to "establish a profitable operating model built on the stores' exceptional customer appeal," Sears said in a statement.
"The business continues to hold great promise," said Chairman and Chief Executive Alan J. Lacy.
Sears opened the first Great Indoors in Denver in 1998 as it looked for ways to grow outside its core department-store business. The concept targeted shoppers with household incomes of $50,000 or more.
Jeff Jones, Sears' senior vice president and general manager of The Great Indoors, said Thursday that management has identified the major strengths of the format, as well as opportunities to serve customers better while improving the stores' performance.
"We are redirecting the stores to further strengthen an already powerful customer proposition, as evidenced by the chainwide individual store average sales of more than $30 million per year," Jones said.
Specifically, Sears hopes to improve inventory management, merchandising and product sourcing.
