Sears forecasts $1.25B in cost savings in 2017, names new CFO
Sears Holdings also named Rob Riecker as finance chief effective immediately. Riecker was previously controller and head of capital markets activities. He succeeds Jason Hollar who took on the role in October.
"Earlier this year, we initiated a strategic restructuring program and committed to improving our operating performance and financial flexibility in a very challenging retail environment," said Edward S. Lampert, Chairman and Chief Executive Officer of Sears Holdings. "While we have made significant progress in reducing our cost base and enhancing our member value proposition, we need to take further action. Accordingly, we will increase our structural cost savings target by $250 million on an annualized basis and accelerate our efforts to maximize value from our real estate portfolio, which we believe will improve our financial flexibility as we pursue our strategic transformation."
Sears said it expected to post a profit for the first three months of the year, largely tied to sales of real estate and the Craftsman brand.
The company announced it has achieved significant progress in its restructuring program, with $700 million in annualized cost savings already actioned to date. The initiatives being taken to realize $1.25 billion in annualized cost savings in 2017 include:
- The previously announced closure of 150 non-profitable stores, comprised of 108 Kmart and 42 Sears locations, which has been completed
- The closure of 92 underperforming pharmacy operations in certain Kmart stores and 50 Sears Auto Center locations
- Simplification of the organizational structure of Sears Holdings through consolidation of the leadership of retail operations for Sears and Kmart and elimination of certain senior management roles
- A comprehensive review of the company's value chain to identify broader opportunities for competitively priced products and drive operational efficiencies.
"Consistent with our ongoing strategy of focusing on our Best Stores, Best Categories and Best Members, we will continue to take difficult yet necessary actions. As we sharpen our focus on profitable areas of our business, we will also continue to closely evaluate the longer-term viability of stores where a clear path to return to profitability is not in sight. We are determined to take all necessary actions to improve the performance of Sears Holdings and will leverage our lease optionality to reconfigure our stores and reduce capital obligations," Lampert said.