Sears is laying off workers to stay in business

Sears is laying off Kmart workers in an apparent move to cut costs as the company struggles to stay afloat.

The layoffs, executed last week, targeted full-time workers, including assistant managers and department heads — or "leads" as Kmart calls them — across the country.

Full-time workers are salaried with benefits, which makes them more expensive to employ than part-time workers.

Sears, which owns Kmart, confirmed the layoffs to Business Insider.

"Eliminating positions is never an easy decision to make, and we don't take it lightly as we recognize the valuable contributions affected associates make to the company," Sears spokesman Howard Riefs said. "We are hopeful that associates affected by reduced staffing requirements apply for open positions at other Sears and Kmart locations."

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Riefs declined to reveal how many workers were laid off in total. He said some stores wouldn't be affected by the cuts. "Some will have reductions or additions of full-time positions," he said.

According to information from two store workers who spoke to Business Insider on the condition of anonymity, the cuts affected most of Kmart's 800 stores.

Among the positions cut were assistant store managers, front-end leads (managers in charge of the customer-facing part of the store), backroom leads (managers in charge of unloading and organizing merchandise in the stock room), and pricing leads (managers in charge of pricing and store signage).

On message boards, employees claim the cuts are leaving stores with a skeletal staff. The company is pitching the cuts to employees as part of a strategy called "simple stores" that involves bypassing the stock room and moving all incoming merchandise right to the shelves.

At the Kmart store in Rochester, New Hampshire, the strategy has led to an accumulation of boxes on the store floor, according to photographs provided to Business Insider.


Business Insider

Thephotographs were taken on Thursday, and the store has looked like this for nearly two weeks, according to the source, who asked to remain anonymous.


Business InsiderA sign on the boxes reads, "Pardon our dust! We are in the process of transitioning the sales floor to a new look."

Sears is running out of money

The layoffs come as Sears looks for ways to cut costs as its debt load balloons and sales continue to decline.

Same-store sales at Sears and Kmart stores fell by more than 12% during the all-important holiday season.

Sears CEO Eddie Lampert recently agreed to provide up to $1 billion in financing through his hedge fund, ESL Investments, to keep the company afloat in the near term.

But the credit ratings agency Fitch Ratings says Sears still may not have enough cash to make it through the upcoming fiscal year, which begins next week.

The company will likely burn through $1.8 billion in fiscal 2017, according to the Fitch note published Wednesday. To stay afloat, Sears will have to raise approximately $2 billion in liquidity.

Raising cash is getting increasingly harder for Sears, however, given the fact that it only has about 200 owned stores left to sell.

"Fitch believes restructuring risk for Sears remains high over the next 12 to 24 months given the significant cash burn and reduced sources of liquidity," the agency said.

A restructuring could mean a bankruptcy filing, as Phil Wahba at Fortune points out.

Sears has more levers to pull to raise cash — such as selling off its Kenmore brand and Home Services division — but time is running out for a turnaround, according to analysts.

Do you work at Sears or Kmart and have a story to tell? If so, get in touch with this reporter directly at

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