Sears CEO blasts 'false and exaggerated' reports that Kmart is shutting down

Sears CEO Eddie Lampert is hitting back against reports that Kmart is shutting down.

In a blog post published on Monday, Lampert blasted “frequent false and exaggerated claims surrounding our Kmart business.”

“I can tell you that there are no plans and there have never been any plans to close the Kmart format,” he said. “In fact, we’ve been working hard to make Kmart a more fun, engaging place to shop, powered by our integrated retail innovations and Shop Your Way. To report or suggest otherwise is irresponsible and is likely intended to do harm to our company to the benefit of those who seek to gain advantage from posting these inaccurate reports.”

Lampert posted the blog following multiple reports from Wall Street analysts claiming that Sears and Kmart are nearing bankruptcy. Kmart store employees have also expressed concerns that the chain is shutting down.

“We are working to restore the company to profitability,” Lampert reassured investors in the blog post. “We are focused on executing our plan and establishing a foundation from which Sears Holdings can grow for years to come.”

But, he added, “we won’t be able to restore profit immediately.”

Kmart (69)Business Insider/Hayley PetersonA Kmart store in Richmond, Virginia.

Fitch Ratings last week identified Sears as one of seven major retailers at risk of going bankrupt in the next 12 to 24 months and eventually liquidating.

In September, Moody’s analysts downgraded Sears’ liquidity rating, saying Sears and Kmart don’t have enough money — or access to money — to stay in business.

The analysts said Sears is bleeding cash and will have to continue to rely on outside funding or the sale of assets, such as real estate, to sustain operations. Kmart in particular is at risk of shutting down, they said.

“The ratings… reflect our view on the uncertainty of the viability of the Kmart franchise in particular given its meaningful market share erosion,” the analysts wrote.

Sears said in August that its cash and equivalents have fallen to $276 million from $1.8 billion one year ago.

As a result, the retailer was forced to accept $300 million in financing from Sears CEO Eddie Lampert’s hedge fund, ESL Investments, in the most recent quarter.

The company is losing cash as sales plunge at its namesake and Kmart stores.

Net sales fell 8.8% to $5.7 billion in the second quarter. Same-store sales plunged 7% at Sears stores and dropped 3.3% at Kmart stores.

Kmart (50)Business Insider/Hayley PetersonA Kmart store in Richmond, Virginia.

Sales have been falling for years.

Sears’ sales dropped from $41 billion in 2000 to $15 billion in 2015.

Kmart, which merged with Sears in 2005, has seen its sales plunge from $37 billion to $10 billion in the same period.

Sears has been closing unprofitable stores to stop the bleeding.

Most recently, Sears closed nearly 80 stores this summer — most of which were Kmart stores — and announced another 64 Kmart closures that will take effect at the end of this year, as Business Insider first reported.

Kmart (6)Business Insider/Hayley PetersonA Kmart store in Richmond, Virginia.

But Lampert emphatically denied on Monday that the chain’s closures are a sign that it’s planning to cease operations.
The closures are part of a strategy to return Sears to profitability, he said.

“We have been clear that we are intent on improving the performance of our unprofitable stores and, if we cannot, we will close them,” he said. “We are acting more aggressively and continuing to evaluate stores as leases expire and as other opportunities present themselves that improve the economics of Sears Holdings.”

Despite the continuing store closures, “our stores remain extremely important to our future,” he said, and “we expect to end up with a large chain of stores.”

NOW WATCH: We did a blind taste test of fast-food burgers

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.