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Sears to cut 400 jobs; head of online to step down this week

  • Sears is cutting 400 full-time jobs at its corporate offices, in Hoffman Estates, Illinois, and from its support functions.
  • This is part of the department store chain's ongoing restructuring efforts, which is designed to deliver $1.25 billion in annualized cost reductions.
  • Sears will provide eligible associates with severance compensation and transition assistance.
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Sears is slashing 400 full-time jobs at its corporate offices, in Hoffman Estates, Illinois, and from its support functions, the retailer announced Tuesday.

The cuts are part of the department store chain's ongoing restructuring efforts, which are designed to deliver $1.25 billion in annualized cost reductions, the company said.

Stephan Zoll, president of Sears' online operations, is also stepping down from the company, effective June 15, Sears said Tuesday in a separate 8-K filing with the Securities and Exchange Commission.

In an internal memo to employees, CEO Eddie Lampert added that David Pastrana, president of Sears' apparel division, and Eric Jaffe, senior vice president of Shop Your Way, will be departing the company after a brief transition.

"We are making progress with the fundamental restructuring of our operations that we initiated in February," Lampert said in a statement.

"We remain focused on realigning our business model in an evolving and highly competitive retail environment. This requires us to optimize our store footprint and operate as a leaner and simpler organization."

Sears stock was falling around 2 percent Tuesday morning on this news.

Sears said it has made about $1 billion in annualized cost savings to date, and remains on track to meet its $1.25 billion target. The retailer said it will continue to take "all necessary action" to achieve profitability.

With respect to this latest round of job cuts at Sears, the company said Tuesday that certain positions at its field operations will also be impacted by restructuring actions.

"While the total number of people who are directly affected represents a small fraction of our total headcount, we are conscious of the impact on individual employees," Sears said.

Sears will provide eligible associates with severance compensation and transition assistance.

"We don't take eliminating positions lightly," a Sears spokesman told CNBC in an email. "However, in our efforts to become a more competitive retailer and return our company to profitability, we need to look for ways to streamline the organization. The reductions are taking place across various areas of the company. They represent a mix of positions in various business units and roles across the organization."

As part of the organizational restructuring, Sears said it first eliminated open positions and then reduced contract employees, "in an effort to minimize the impact on full-time employees."

Just last week, it was confirmed that Sears plans to shutter 66 additional stores, adding to the list of 180 closures that was announced earlier this year. On Tuesday, Sears said the latest store closures were "initiated" last week, though the exact locations of the stores being closed haven't been confirmed.

Other steps the company said it's taking to improve performance include paying down $418 million of term loans, monetizing certain real estate properties that generated over $200 million in proceeds, and entering into an agreement with Metropolitan Life Insurance to reduce the company's pension plan.

As of Monday's close, Sears stock has shed more than 41 percent over the past 12 months and is down about 25 percent for the year-to-date period.