Dive Brief:

• Sears Holdings Corp. said Thursday that it will close 68 Kmart and 10 Sears stores nationwide this summer. The move follows the company’s February announcement that it would accelerate closings of underperforming stores, according to a press release. 

• Sears expects the closures to “generate a meaningful level of cash” as it liquidates store inventory and sells or subleases some of its real estate. Along with more than $1.2 billion in debt financing the company disclosed earlier this month, Sears says it believes it “has taken important steps toward its primary 2016 objective to restore profitability.”

• All of the targeted Sears stores and nearly all of the Kmart stores will close in late July; two Kmart stores will close in mid-September. Eligible associates impacted by the closures will receive severance and have the opportunity to apply for open positions at area Kmart or Sears stores.

Dive Insight:

Many retail experts say that America is over-stored in general, and some larger legacy retailers like Sears may be over-stored in particular. Closing underperforming locations is an efficient way to trim costs and allow a retailer to focus on its strengths.

"The decision to close stores is a difficult but necessary step as we take aggressive actions to strengthen our company, fund our transformation and restore Sears Holdings to profitability," Sears Holdings​ chairman and CEO Edward S. Lampert said in a statement. "We're focusing on our best members, our best categories and our best stores as we work to accelerate our transformation."

About a year ago Don Ingham, director at Tenth Avenue Holdings and portfolio manager of the TAH Core Fund (which have investments in Sears), told Retail Dive that the retailer's move to close underperforming stores did bode well for its future. Ingham explained that while Sears' aggressive cost-cutting—​its store closings and layoffs—​has been expensive in the short term, “those measures mask the performance and make it look worse than it is. You’re going to see the loss come down and same-store sales go positive.”

But there’s a limit to what Sears can do, and omnichannel retailers do need to be able to leverage their brick-and-mortar stores to reach customers. The question for Sears is whether it is still over-stored and thus has room for still more closings, or if cost-cutting might begin to eat into its ability to operate effectively. Its Shop Your Way omnichannel program, which includes in-store and curbside pickup, has garnered praise from retail experts and customers alike, but it's unclear how much it's contributing to its turnaround.

Q4 same-store sales at Sears stores fell 6.9% and at Kmart stores fell 7.2%, something of an improvement from the past three quarters, when sales at Sears fell 11.1% and at Kmart declined 7.3%. Last week, Sears Holdings announced a $500 million loan earmarked to boost its comeback efforts, most notably the Shop Your Way program.