The corporation’s latest efforts to save a dollar, and itself, involves closing eight of its namesake department stores along with 35 Kmart locations throughout the nation.
Sears executives believe that such a move will reduce the cost of square footage the company is responsible for and, hence, lower the overall budget.
Troubles in the Past and Present
This is not the first time that Sears has experienced its share of financial heartache. In fact, the company has been dealing with a troubled budget for the past few years. The corporation’s chief executive officer (CEO) Eddie Lampert and his team of officials announced plans to close 150 retail stores in January. The news came after some vendors began reducing support for Sears by taking additional measures to ensure minimal loss in the instance of the corporation going bankrupt. A few suppliers even told media in March that they were reducing shipment amounts and redefining payment terms to guard themselves against the risk of non-payment from Sears.
The troubled corporation’s executives are also taking special measures, which include amending its second lien credit facility to have a maximum $500 million in borrowing cushion. Sears executives have also sold more than $200 million worth of the company’s real estate to pay down debt.
What About Employees?
While the fate of employees affected by the initial 150 store closures is uncertain, a Sears spokesperson assured the press that employees eligible for severance pay would receive such compensation. The spokesperson also told media that workers affected by most recent store closures would have the option of applying for employment at stores not presently at risk of going out of business.
Those scheduled for lay-off with immediate bills may need to take advantage of various loan options available on the market. Industry professionals, Moneybanker explains that some types of loan may provide flexible repayment terms to consumers who need a short-term financial break while in between job options.
Regardless of how freshly terminated employees choose to handle cash flow problems, one thing is for certain: Sears Holdings Corp is in severe financial turmoil. The corporation’s CEO claims to be in the process of re-creating the company’s image through smaller-formatted stores that take on more of a boutique format moving forward. In any case, Sears is on track to meet its cost-cutting targets this year.