Roanoke Times
Copyright (c) 1995, Landmark Communications, Inc.
DATE: TUESDAY, January 26, 1993 TAG: 9301260162
SECTION: VIRGINIA PAGE: A1 EDITION: METRO
SOURCE: SANDRA BROWN KELLY STAFF WRITER
DATELINE: LENGTH: Long
SEARS ANNOUNCES CUTBACKS
The Sears Telecatalog Center in Roanoke will close this year, ending jobs for some 1,200 workers. Sears, Roebuck & Co. is quitting the catalog business.The nation's third-largest retailer on Monday announced changes that will eliminate about 16,000 full-time and 34,000 part-time positions. Sears Merchandise Group had an estimated 350,000 employees in 1992.
Executives said the restructuring will improve the company's net income by about $300 million by 1994 and enhance its value to shareholders. Sears stock went up $1.87 1/2 Monday and closed at $50.75 a share.
The Sears news was the third major job loss to hit the Roanoke Valley in recent weeks. Already the area is scheduled to lose 1,500 banking and manufacturing jobs because of company closings or mergers.
And there could be still more Roanoke-area jobs lost in the Sears restructuring, which includes an early-retirement offer to salaried workers.
Joe Sears, manager of Sears retail store at Roanoke's Valley View Mall, said about half of the salaried staff there is eligible for the retirement plan, including him.
The major aspects of the plan Sears announced Monday are the end of its catalog business after this year's Christmas season and the closing of more than 100 unprofitable retail and specialty stores.
In Virginia, Sears will shut three stores - in Harrisonburg, Norfolk and Waynesboro - plus four Pinstripes Petites specialty stores in Northern Virginia.
No dates were announced Monday for the closing of either the stores or seven of the company's telecatalog centers.
The centers will be phased out as business demands, said Sears spokesman Guy Eberhart.
The way the centers operate, customer calls go to available operators anywhere in the 11-center system. Therefore, Eberhart said, customer demand will determine how quickly the telephone centers close. But he also said that at some point there will be a plan for the order in which the centers will shut down operations.
"It is premature" to talk about that now, he said.
Equally vague was a timetable for the closing of franchise catalog sales merchants which operate mostly in small communities. All will close this year, however, said Eberhart.
There are 20 of the centers in Western Virginia, including several in the New River Valley and one each in Bedford, Lexington, Covington and Rocky Mount.
Other parts of the plan include the use of outside installation companies for Sears home-improvement products and a cutback in services offered by the company's auto centers, eliminating the need for skilled mechanics.
However, the end of the nearly 100-year-old catalog was the most prominent part of the news, surprising even Sears' executives such as Joe Sears.
In 1992, Sears' catalog division had estimated U.S. revenues of about $3.3 billion.
"This was a very difficult decision because the catalog is our heritage. It's how Sears started," said Arthur C. Martinez, chairman and chief executive officer. "However, the U.S. catalog had after-tax losses ranging from $135 million to $175 million in each of the last three years. We have concluded that we cannot improve our market position or achieve an acceptable return on investment fast enough or with sufficient certainty to justify remaining in the business."
The company also will close five catalog merchandise distribution centers in 1993, including one in Greensboro, N.C., that employs about 1,000 people.
Martinez, who said the changes were "painful but necessary," said Sears will focus on its core retail businesses and "locations where we are either winning today or have the capacity to do so in the near future."
Sears will continue to develop Homelife furniture centers that operate independently from its department stores in major metropolitan areas. Over the next five years, Sears said, it will stop selling furniture in its smaller retail stores.
Among the first stores in Virginia to discontinue furniture sales is the company's Lynchburg store.
Sears also announced it would establish a $200 million after-tax reserve to write down land held for office development and selected office properties in Homart Development Co., the company's commercial real estate development subsidiary.
Additionally, Sears will take a $1.9 billion non-cash, after-tax charge in its 1992 fiscal year earnings to adopt previously announced new accounting standards covering post-retirement health and other post-employment benefits. Of the total after-tax charge, $800 million is for the catalog operation.
Sears has eliminated more than 48,000 jobs in its retailing division since 1990 in an effort to regain market share and ensure the unit's profitability. The Sears chain slid from No. 1 to No. 3 among U.S. general merchandisers, behind Wal-Mart Stores Inc., the nation's largest merchant, and No. 2 Kmart Corp., in 1991.
In October, Sears reported an $833.7 million third-quarter loss, its first quarterly loss since 1933. The company blamed the results on enormous insurance claims for hurricane damage and a costly auto-repair scandal.
The company said that it wasn't bad publicity over repair fraud that is causing drastic cuts at its Tire and Auto Centers.
Sears, which recently took on distribution of Goodyear tires, is the nation's No. 1 tire retailer. Its DieHard battery also is No. 1 among aftermarket batteries. And though not No. 1, Sears shocks are among the sales leaders in that segment as well.
The Associated Press and the Chicago Tribune provided information for this story.