Sears Holdings has announced the closure of 78 stores nationwide (68 Kmart and 10 Sears stores), a majority of which will shut down by July, and minimum wage costs are a prime culprit.
Via The Political Insider:
California, New York, and other states are raising the minimum wage, thanks to pressure from President Barack Obama and liberal state politicians.
But those increases hurt companies in serious ways. Now, the Sears Holdings company has announced that 68 Kmart stores and 10 Sears stores will close immediately this summer to cut losses.
This is on top of 50 closings which have already been scheduled, after a disappointing Christmas sales season in the Obama economy.
Edward S. Lampert, Chairman and Chief Executive Officer of Sears Holdings, said in a statement that the decision was “a difficult but necessary step as we take aggressive actions to strengthen our company.”
Lampert explained that part of the reason for the numerous closures is “higher minimum wage costs” that “hurt performance.”
In March, Sears Holdings announced a drop in shares of 12.4% due to plummeting sales and profits. Why? The Motley Fool reported that “Sears, like many large retailers, is being negatively affected by recent minimum wage increases.”
Columnist Doug McIntyre wrote a year ago that struggling chains such as Sears would not be able to survive worker pay raises but predicted they would still “be forced to give raises because of public pressure and worker unrest and protests.”
He warned that “the company cannot draw water from a dry well.”
Lampert himself warned of rising minimum wage costs, saying “such additional cost burdens can be the straw that breaks the camel’s back, causing stores to close and eliminate jobs.”
Consider the camel’s back broken.
Four of those store closings are happening right here in New York, where Governor Cuomo’s hike in the minimum wage to $15/hour is poised to destroy over 200,000 jobs.