Sears Holdings Corporation announced important actions related to its previously disclosed strategic restructuring program, which is designed to deliver $1.25 billion in annualized cost reductions. These actions include the elimination of approximately 400 full-time positions at its corporate offices and support functions globally, in addition to certain positions at its field operations as well as the store closures we initiated last week.
Combined with the restructuring actions announced since the beginning of the fiscal year, Sears Holdings has actioned nearly $1.0 billion in annualized cost savings to date and is on track to deliver $1.25 billion in annualized savings through actions taken in fiscal year 2017. The company will continue to take all necessary action to drive improvements in our organization to achieve our profitability objective with a greater focus on Best Members, Best Categories and Best Stores.
“We are making progress with the fundamental restructuring of our operations that we initiated in February,” said Edward S. Lampert, Chairman and Chief Executive Officer of Sears Holdings. “We remain focused on realigning our business model in an evolving and highly competitive retail environment. This requires us to optimize our store footprint and operate as a leaner and simpler organization.”
Organizational Restructuring
As part of the company’s ongoing efforts to simplify its organizational structure and enabling greater consolidation of the Sears and Kmart corporate and support functions, approximately 400 full-time positions at our corporate offices and support functions will be eliminated. The majority of these positions are related to the corporate workforce at Sears Holdings’ headquarters in Hoffman Estates. In addition, certain positions at field operations will be impacted by these restructuring actions. Sears is providing eligible associates severance compensation and transition assistance. As part of the organizational restructuring, the company first eliminated open positions and reduced contract employees in an effort to minimize the impact on full-time employees.
Transformation Progress to Date
The announcement is in addition to the significant actions the company has already taken. Since the beginning of 2017 it has taken steps to improve operational performance, enhance financial flexibility and drive strategic transformation, including:
- Significant progress on its strategic $1.25 billion restructuring program, with nearly $1.0 billionin annualized cost savings already actioned to date, including the actions announced today;
- Paydown of approximately $418 million of term loans outstanding under its revolving credit facility and extension of the maturity of $400 million of our $500 million 2016 Secured Loan Facility up to twelve months;
- Entered into an agreement with Metropolitan Life Insurance Company (“MLIC”) to annuitize $515 million of pension liability to reduce the overall size of the company’s pension plan, future cost volatility and plan administrative expenses;
- Monetization of certain real estate properties that generated over $200 million in proceeds;
- Continued growth of our Shop Your Way ecosystem through strategic partnerships and value offerings, including recently announced partnerships with Citi and Time Inc.
Path Forward
Sears Holdings Inc. will continue to take all necessary action to drive improvements in our organization to achieve its profitability objective with a greater focus on its Best Members, Best Categories, Best Stores strategy. Going forward it will focus investments to drive the growth of assets such as Shop Your Way; the Kenmore, Craftsman and DieHard brands; Sears Home Services; and Sears Auto Centers. It will also continue to evaluate strategic options across the portfolio to unlock value from assets through partnerships, joint ventures or other means.