Investing.com -- Shares in Sears Holdings Corporation (NASDAQ:SHLD) surged more than 7% in after-hours trading after the department store announced plans on Thursday to close nearly 80 Kmart and Sears stores combined by the end of the summer.
The developments follow an announcement in February in which the company said it would accelerate the closure of a wide swath of stores in the face of persistently low sales. The announcement on Thursday also comes after the completion of a thorough evaluation of the company's store portfolio, recent store performance and the timing of various lease expirations. In total, Sears Holdings plan to close 68 Kmart and 10 Sears stores this summer. Of the closures, all of the Sears stores and nearly all of the Kmart stores will close in late-July, the company said. In addition, two Kmart stores will close in mid-September.
"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," said Edward S. Lampert, Chairman and Chief Executive Officer of Sears Holdings. "We're focusing on our best members, our best categories and our best stores as we work to accelerate our transformation."
Earlier this month, Sears Holding announced that it raised more than $1.2 billion in debt financing to help restore the company to profitability. Along with the debt offering, Sears said it expects the liquidation of store inventory and the sale or sublease of the related real estate to provide it with enough capital to help complete its transformation.
"Sears Holdings will continue to transform as the role of the store evolves to fit the way that members want to shop," Lampert added. "Through our continued investments in Integrated Retail, our stores are a critical component of our strategy as we provide our members with industry-leading innovations such as Meet with an Expert, In-Vehicle Pickup and Return and Exchange in Five."
Sears also announced that eligible associates who will be affected by the store closures will receive severance packages and will be given the opportunity to apply for job vacancies at local Kmart or Sears stores.
Shares in Sears surged 1.30 or 7.22% to 19.31.