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Business & Tech

Redlands Kmart On Chopping Block?

Sears, Kmart announced the closure of more than 100 stores, but the final list has not been made public yet. Will the popular Redlands Kmart make the cut?

Sears Holdings Corp. announced Tuesday its plans to close between 100 and 120 Sears and Kmart stores to raise cash after a weak holiday shopping season for the retailer.

The closings fueled speculation about whether the 125-year-old retailer can turn itself around.

This move is the latest in a long series of the company trying to “re-invent” itself while struggling with low sales and unappealing stores, while rivals like Target Corp. and Wal-Mart Stores Inc. took over the mantle of the one-stop shopping source.

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Locally, there is a Kmart store in Redlands, at 1625 W. Redlands Blvd. The store is quite popular and has been in the news recently with a number of “layaway angels” paying off strangers’ layaway balances as a holiday gift.

Management at the Redlands store did not answer questions, referring all inquiries to their national headquarters. Corporate media relations said when the list is published, it will appear on www.searsmedia.com.

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“There's no reason to go to Sears,” said New York-based independent retail analyst Brian Sozzi in a CBS News article. “It offers a depressing shopping experience and uncompetitive prices.”

Billionaire investor Edward Lampert purchased Kmart out of bankruptcy in 2003 and bought Sears, Roebuck & Co. a year later. Since 2004 Sears Holdings -- which operates both Kmart and Sears stores -- has watched its cash and short-term investments go from about $2.09 billion for the year ended Jan. 31, 2004 to $1.34 billion for the year ended Jan. 31, 2011, according to FactSet. The figure now stands at about $700 million.

Credit Suisse analyst Gary Balter says the softer-than-expected holiday sales performance point to "deepening problems at this struggling chain and renewed worries about Sears survivability."

Balter added that Sears' weakening performance may lead its vendors to start to worry about their exposure. If vendors stop shipping to a retailer or start insisting on cash up front, it can spell the end.

That company disputes talk that it is in trouble financially or will have problems surviving. Spokesman Chris Brathwaite says Sears Holdings has more than $3.5 billion of liquidity, consisting of $700 million in cash and $2.9 billion available under its credit lines, according to its website.

Still, Sears Holdings said its declining sales, ongoing pressure on profit margins and rising expenses pulled its adjusted earnings lower. The company predicts fourth-quarter adjusted earnings will be less than half the $933 million it reported for the same quarter last year.

Some industry experts say part of the problem Sears is facing is that economic difficulties continue to grip its core customers. These middle-income shoppers have seen their wages fail to keep up with higher costs for household basics like food.

But the bigger issue, analysts say, is that Sears hasn't invested in remodeling, leaving its stores uninviting.

Sears has yet to determine which stores will close but said it will post on http://www.searsmedia.com when a final list is compiled. The company would not discuss how many, if any, jobs would be cut.

The company said that the store closings will generate $140 to $170 million in cash from inventory sales. It expects the sale or sublease of real estate holdings to add more cash. The Hoffman Estates, Ill., company has more than 4,000 stores in the U.S. and Canada.

Its stock dropped $10.66, or 23.3 percent, to $35.19 in midday trading. The shares dipped to their lowest point in more than three years at $35.13 earlier in the session.

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