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Consumers have unwrapped their holiday gifts. Now

Time:2018-01-06 05:36Shoes websites Click:

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Consumers have unwrapped their holiday gifts. Now, it’s retailers’ turn to see what the holiday season brought them.

Companies and their lenders are tallying sales, calculating returns and weighing prospects for the year ahead. It’s “the reckoning time,” said Frank Layo, managing director at consulting firm Kurt Salmon.

It didn’t end well last year: The Limited, Wet Seal, Marbles Holdings, BCBG, hhgregg, RadioShack and Gander Mountain all filed for Chapter 11 protection by the end of March. Retailers announced 6,955 store closures in 2017, outpacing closings at the height of the Great Recession, according to Fung Global Retail & Technology.

Amid the shakeout, some retailers that were slow to adapt to the rise of e-commerce seem to have begun evolving, cutting excess bricks-and-mortar space and adding new services to adapt to demands for a seamless blend of online and in-store shopping.

But other retailers — especially those saddled with hefty debts — are still struggling to make the transition. Early reports suggest the industry caught a break in the holiday season that just ended, but with many retailers not expected to report fourth-quarter results for a few more weeks, it’s not clear whether those most in need of a strong end to the year shared in the holiday wealth. Some chains, including Sears and Macy’s, this week announced new rounds of post-holiday store closures, creating more vacancies for malls to fill.

“There are winners and losers, and there’s a chasm growing in the middle,” Layo said.

Few are under more scrutiny than Sears Holdings. The Hoffman Estates-based parent of Sears and Kmart hasn’t shared details on its holiday performance. But on Thursday it announced plans to close 103 stores by April, on top of 63 stores it had previously said would close after the holidays.

Sears’ struggles aren’t new. Both Fitch Ratings and S&P Global Market Intelligence put the retailer on short lists of chains at risk of defaulting on debts. In Sears’ case, they amount to $752 million due in 2018, on top of funds Sears will need to find to pay for operations while it works to turn its business around.

“Our Chairman and CEO Eddie Lampert stated at the May 10, 2017, annual shareholders’ meeting that ‘we are fighting like hell’ and doing everything in our power for Sears and Kmart to succeed. That remains true,” Sears spokesman Larry Costello said.

A restructuring program announced last year hit its cost savings goal of $1.25 billion, and decisions to sell products from brands like DieHard and Kenmore — which had been largely only sold at Sears — on Amazon are part of the company’s push to become “a more agile, competitive and innovative retailer,” he said.

Recently, Sears announced it paid down $325 million on a loan originally due midway through 2018 and pushed the deadline on $400 million in remaining debt into 2019. It also plans to use real estate-backed credit to cover an upcoming pension contribution.

The company said those moves would give it extra financial flexibility, but analysts are skeptical they would change Sears’ prospects.

“They’ve kicked the can a bit, but it doesn’t change the story,” said David Silverman, a Fitch senior director covering the retail industry.

Sears has also tapped the wallet of CEO Edward Lampert. Lampert and affiliates of his hedge fund, ESL Investments, last year lent the company $600 million, backed by mortgages on Sears’ properties. Store closures and asset sales can help cut costs and bring in cash, but also give the company less to work with going forward, said Christina Boni, vice president and senior analyst at Moody’s Investor Service.

Also on Fitch and S&P Global Market Intelligence’s short lists of retailers at risk is Bon-Ton, parent of chains including Carson’s and Bergner’s. The department store operator doesn’t have significant debts due as imminently as Sears. But talk of wary vendors and working with advisers to “establish a sustainable capital structure to support the business” raised concerns, Fitch’s Silverman said.

Sales at stores open at least a year were up 3.1 percent in the first four weeks of November, but the company has announced plans to close at least 40 stores this year.

Macy’s, too, is shutting down stores. In 2016, it said it planned to gradually shutter 100 locations, and added seven more on Thursday. Sales at stores open at least a year were up 1 percent during November and December, Macy’s said.

Moving earlier, when it was on firmer financial footing, gave Macy’s more room to maneuver, said Neil Stern, senior partner at Chicago-based consulting firm McMillanDoolittle.

“(Macy’s has) a long way to go, but among the competitive set they’re in, they’re the healthiest and have more wherewithal to do something,” he said.

So far, J.C. Penney is the only other major retailer to share details on sales over the holidays, reporting a 3.4 percent increase during November and December at stores open at least a year.

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