Closings Loom as Sears Holdings Continues to Struggle

While the retail industry’s attention in recent weeks has been focused on Borders' Chapter 11 filing, there is another retail giant with a massive store portfolio that may be raising alarm bells in the near future.

For years now, Sears Holdings Corp. has been reporting declining sales at both its Sears and Kmart stores. Most recently, in the firm’s fiscal 2010, same-store sales fell 1.6 percent—dropping 3.6 percent at Sears and rising 0.7 percent Kmart. It was just the latest annual decline for the firm. Same-store sales fell 5.1 percent in 2009, 8 percent in 2008, 4.3 percent in 2007 and 3.7 percent in 2006. During that time span, Sears Holdings’ net sales dropped by nearly $10 billion, from $53.0 billion in 2006 to $43.3 billion last year.

Yet the firm survived the recession while many others failed. But the two brands have continually struggled to find a niche in the retail sector and ceded market share for years.

Observers questioned the tie-up of the two firms from the beginning and many still wonder whether the brands can survive long term. To a large extent, that might depend on what Sears Holdings decides to do with its real estate, according to five retail and retail real estate consultants interviewed by Retail Traffic. (Sears Holdings declined to comment.)

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