Dive Brief:

• Kmart and Sears' new parent TransformCo announced this week it will close 26 large-format locations in October, according to a company announcement. The company said "all eligible associates will be offered the same number of weeks of severance as offered to employees of Sears Holdings Corporation prior to that company's Chapter 11 filing in October 2018."

• The five Kmart stores and 21 Sears stores set to close are in multiple geographic regions and include locations in California, Maryland, New York, Ohio and Alabama. Additionally, Sears Auto Centers at the aforementioned locations will close at the end of this month.

• Liquidation sales are expected to begin around Aug. 15. The company said it "cannot rule out additional store closures in the near term."

Dive Insight:

While there have been subtle signs of life from Sears in recent months with new store openings, a new line of its Craftsman products and integrations with Amazon Alexa, the troubles for the once-bankrupt retailer are far from over.

"Over the past several months, we have worked hard to strengthen our vendor relationships, return our inventory levels to normal, and improve customer satisfaction and operations; however, we have faced a number of challenges returning our stores to sustainable levels of productivity, including differences with Sears Holdings over our purchase agreement and a generally weak retail environment," the company said on Tuesday. "These challenges have unfortunately affected our performance and limited our strategic choices."

In April the company announced it was opening three Home & Life stores, a new smaller-format concept focusing on selling appliances, tools, mattresses and lawn equipment. The company on Tuesday announced it would "accelerate" the expansion of smaller store formats. TransformCo said it plans to open "several hundred" Sears Hometown locations once the deal for the banner is finalized, which the company previously said it expects to occur in Q3. Transform Holdco agreed to acquire Sears Hometown and Outlet Stores in June.

Sears exited bankruptcy earlier this year when its chairman and former CEO Eddie Lampert was granted approval for a $5.2 billion bid, submitted through his hedge fund, ESL Investments. As part of a previous bid, Lampert proposed preserving 425 stores and 50,000 jobs. In February, ESL Investment's affiliate company Transform Holdco acquired Sears Holdings.

"Our goal remains to return the company to profitability and preserve as many jobs as possible in the communities we serve," the company said on Tuesday.