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Sears Closing 63 More Sears and Kmart Stores

Despite already shuttering hundreds of stores in recent years, ailing department store operator Sears Holdings Inc. (SHLD - Get Report) will shut down 63 more Sears and Kmart stores, the latest step as it hobbles to a likely bankruptcy.

Among them, 45 Kmart stores and 18 Sears stores will close in late January, Sears said in a memo to its employees on Thursday, Nov. 2. While the stores will remain open through the holidays, liquidation sales will begin as soon as Thursday, Nov. 9.

The closing Kmart stores are located in Alabama, Arizona, Florida, Georgia, Idaho, Illinois, Kentucky, Michigan, Minnesota, Missouri, North Carolina, Ohio, Pennsylvania, South Dakota, Tennessee, Texas, Virginia, Wisconsin and West Virginia. The states losing a Sears store are Alabama, Arkansas, Arizona, Colorado, Georgia, Massachusetts, Maryland, Pennsylvania, Texas, Utah, Virginia and Wyoming. Many of the Sears locations will first see their Sears Auto Center locations close next month.

According to Fitch analyst Eric Rosenthal, Sears needs annual liquidity of $1.5 billion to $1.75 billion in 2017 and 2018. Secured debt due next year is about $1.4 billion, and while Sears has raised $1.4 billion in asset sales and a credit facility, "restructuring risk remains high, given reduced sources of liquidity via asset sales (150-160 unencumbered stores) and inventory liquidation proceeds from closed stores."

CEO Eddie Lampert is Sears' largest shareholder, with a 30% stake as of Oct. 5. His hedge fund, ESL Investments Inc., is Sears' third-largest shareholder with a 19.1% stake. Lampert and ESL are also significant Sears creditors. Just last Monday, Sears revealed that Lampert had loaned Sears $60 million, just a few weeks after Lampert loaned the company $100 million.

Suppliers are losing patience, demanding cash payments for inventory or cutting ties altogether, as Whirlpool Corp. (WHR - Get Report) did on Oct. 23, severing a century-long relationship.


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