Sears may shutter 100 small stores, slashing jobs

December 22, 1992|By John Schmeltzer | John Schmeltzer,Chicago Tribune

CHICAGO -- Sears, Roebuck and Co. will announce in January that it plans to close up to 100 of its smaller stores nationwide, eliminating thousands of jobs, sources in the company said yesterday.

At the same time, the Sears Merchandise Group will announce a decision to shrink its legendary but money-losing "Big Book" mail-order catalog and to revamp the operations of its field management staff for the second time in a year.

While the giant retailer has shed more than 48,000 jobs since late 1990, no stores have been closed, and the catalog, while under siege, has been untouched. But Merchandise Group Chairman Arthur C. Martinez, hired in September from Saks Fifth Avenue to help restore the profitability of Sears stores, has decided drastic steps are needed, said officials familiar with the decisions.

"There has been an internal debate for some time about the usefulness of the smaller stores," said Edward Weller, an analyst with Montgomery Securities and a leading expert on Sears and Montgomery Ward & Co. who has discussed the moves with Sears officials. "As a group, many of the smaller stores are vulnerable."

Sears officials declined yesterday to comment directly about the plans. But retail experts and some Sears employees said the changes are needed more urgently than ever, because beginning next year the Merchandise Group will have to stand on its own, without revenue or profit support from parts of the company that are to be spun off or sold as part of the company's overall restructuring.

"It should be no secret that business as usual is unacceptable," said a Sears source with knowledge of the company's plans.

Sears operates three classes of stores. The company calls A-class stores those that carry all lines of general merchandise and hardware lines. There are 416 A stores nationwide.

The company operates more than 400 medium-size, or B, stores, which carry extensive assortments of general merchandise. Another 51 C stores serve small communities and carry only major household appliances, hardware lines, sporting goods and automotive supplies. The closings would come among B and C stores.

"Whatever we do will not have an impact on our overall revenues," said the Sears source, noting that 80 percent of the Merchandise Group's revenue is generated by 20 percent of the stores.

He also said the company believes there are a large number of profitable alternatives available to the Big Book, which dates to the company's beginnings in 1886. Though there is likely to be a 1993 spring/summer edition of the mainstay catalog, specialty catalogs are likely to supplant it in the future.

The steps are the latest in a series Sears has taken in an effort to stem its slide from No. 1 to No. 3 among America's retailers and return the stores to profitability.

Next year's restructuring of the company, in which Sears will spin off Dean Witter Financial Services to shareholders, sell a 20 percent stake in Allstate Insurance and sell outright Coldwell Banker Real Estate, presents unusual opportunities to absorb the charges against earnings that would accompany the closings, analysts said.

Those divestitures will force the Merchandise Group to rise or fall on its merits. The losers in the store closings and the catalog changes are likely to be employees, as many of 5,000 of whom could lose jobs.

While field management operations, which provide links between headquarters and groups of stores, were simplified this year, their mission needs to be clarified, the Sears source said.

"We are trying to figure out how to make the existing field structure more effective on a local market basis," the source said.

"Basically this is a company that has been very screwed up for a very long time," said Mr. Weller, noting that additional changes, including more store closings, might be needed to restore Sears to its former glory.

Wal-Mart Stores Inc. and Kmart Corp. rank first and second, respectively, among the nation's retailers.

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