Sears to Cut 4,900 Jobs, Revamp Apparel Focus
About 1,300 positions will be cut at the company's headquarters by the end of next year, eliminating 19 percent of its 7,000 headquarters employees.
Also, 3,600 positions will be dropped from the field organization for its full-line department stores. The field organization, which employs 15,000, includes district and regional offices that supervise the company's 860 department stores.
Reports stated that instead of abandoning Sears' long-struggling apparel business, which chairman/CEO Alan J. Lacy acknowledged earlier this year he had considered, the company will focus even stronger on it. Lacy explained the company's move away from a more traditional department store business model at an analyst meeting in Chicago. Merchandise will be upgraded, the depth of assortments will be improved and the company will move to a single proprietary casual brand for its men's, women's and children's clothing.
"Less productive" promotional activity will be eliminated.
The changes are expected to increase consolidated operating income by more than $1 billion, about 50 percent, to more than $3 billion. The company also expects to double profits from its retail and related services operations by 2004. It expects to achieve annual expense savings of about $600 million by 2004.
A greater emphasis will be placed on core merchandise categories such as home appliances and home fashions.
Retail analyst Kurt Barnard was quoted in press reports as saying the changes were long overdue.
"Sears has unfortunately fallen way behind a lot of competitors," he said. "Sears is going through a major makeover, which I think will make it more profitable, more efficient and, above all, more attractive to shoppers."
Under Lacy, Sears this year closed 89 unprofitable stores, stopped selling cosmetics, sold its pest-control business and ended some underperforming product lines such as bicycles and basketball gear, according to reports.
The company also reported third-quarter earnings, excluding non-comparable items, of $262 million, or 80 cents per share, compared with $261 million, or 76 cents per share, for last year's third quarter.