After closing its 25-year-old Kmart store in Cleveland, Tenn., last month, Sears Holdings Corp. announced Thursday it will close another three East Tennessee stores as part of a nationwide closing of 68 Kmart units, and 10 Sears stores.
Kmart stores in Athens, Sweetwater and Maryville will close by the end of July. Clearance sales will begin at the shuttered retail outlets next month.
Sears said the store closings are needed to boost profits and will account for about 5 percent of its 1,700 store base.
The ailing company, based in Hoffman Estates, Illinois, had said in February that it would accelerate the closing of unprofitable stores following a "challenging" holiday season. The move announced Thursday is expected to generate a "meaningful level" of cash from the liquidation of store inventories and from the sale or sublease of some of the related real estate, it said Thursday.
"The decision to close stores is a difficult but necessary step as we take aggressive actions to strengthen our company, fund our transformation and restore Sears Holdings to profitability," said Edward S. Lampert, chairman and CEO of Sears Holdings in a statement. "We're focusing on our best members, our best categories, and our best stores as we work to accelerate our transformation."
Sears Holdings has struggled for years with weakening sales, unable to keep up with companies that sell appliances, like Home Depot, or general merchandise, like Wal-Mart, or everything, as is the case with Amazon.com. The company has been selling assets to raise cash. In 2011, it operated 4,000 stores. Sears is also shifting away from its focus on running a store network into a member-focused business. Loyal shoppers receive incentives to buy. But those moves haven't gained much traction with shoppers.
In the fourth quarter, which includes the holiday shopping season, revenue at stores opened at least a year fell 6.9 percent at Sears, and 7.2 percent at Kmart. That's a key indicator of a retailer's health because it excludes the volatility from stores that recently opened or closed. The company saw its fourth-quarter loss widen to $580 million, from a $159 million loss a year ago.
Sears declined to say how many workers will be affected from the store closures, but it said that an overwhelming majority of the jobs are part-time positions. Eligible associates will receive severance and will have the chance to apply for open positions at area Sears or Kmart stores.