Doris and Lloyd Warner are longtime Kmart and Sears customers who were surprised to hear Tuesday that the company plans to close at least 100 of its stores across the country.
"I shop at Kmart all the time," Doris Warner said on Tuesday afternoon as she stood next to her husband in the East North Street store parking lot.
On this day, the Rapid City couple, who lives near the store, had just finished buying a pair of shoes for Lloyd Warner.
"The store is nice, wide and comfortable to shop in," Doris Warner said of Kmart. She also said she buys a number of her dressier clothes at the Sears store in Rapid City.
The Warners want to remain loyal Kmart and Sears customers, which is why they are hopeful the Rapid City stores do not make it onto their parent company's store closure list, which has yet to be announced.
After a disastrous holiday shopping season, Sears Holding Corp. announced Tuesday that it will close at least 100 Kmart and Sears stores to raise cash - a move that sparked speculation about whether the 125-year-old retailer can avoid a death spiral fed by declining sales and deteriorating stores.
In making the announcement, Sears Holdings Corp declared that it would no longer prop up "marginally performing" locations. The company pledged to refocus its efforts on stores that make money.
In addition to the Kmart store in Rapid City, the only other Kmart in the Black Hills is in Spearfish. Spearfish's Kmart could also be affected by the closure announcement.
Kathy Mraz and her son, Tony Mraz, were walking out of the Rapid City Sears store carrying a bag filled with new dress shirts on Tuesday when they heard that a number of Sears stores will close as well. The Rapid City residents said they are longtime Sears' customers.
One of the biggest worries for the mother and son is that the possible closure of the Rapid City location meant less competition among stores in town, which would hurt customers in the long run, they said.
After the nationwide closure announcement, value of Sears' stock quickly plunged, 27 percent.
The closings are the latest and most visible move by Eddie Lampert, the hands-on chairman who has struggled to reverse the company's fortunes.
As rivals Wal-Mart Stores Inc. and Target Corp. spruced up stores in recent years, Sears Holdings struggled with falling sales and perceptions of dowdy merchandise.
Some analysts wondered if it was already too late, questioning whether the retailer can afford to upgrade stores as it burns through its cash reserves.
The sales weakness "begins and some would argue ends with Sears' reluctance to invest in stores and service," Credit Suisse analyst Gary Balter wrote in a note to clients.
"There's no reason to go to Sears," added New York-based independent retail analyst Brian Sozzi. "It offers a depressing shopping experience and uncompetitive prices."
Sears Holdings has watched its cash and short-term investments plummet by nearly half since Jan. 31, from about $1.3 billion to about $700 million.
The projected closings represent only about 3 percent of Sears Holdings' U.S. stores. And the company has actually added stores since the Sears-Kmart merger in 2005. It has about 3,560 stores in the U.S., up from 3,500 right after the merger, thanks to the addition of more small stores.
But the company hinted that more closings could be on the horizon.
The store closings were expected to generate $140 million to $170 million in cash as the company sells down their inventory. Selling or subleasing the properties could generate more money.
Spokesman Chris Brathwaite said the company had not determined which stores would close or how many jobs might be cut. He disputed speculation that the company will have problems surviving, noting it still has $2.9 billion available under its credit lines.
Still, the company's announcements were grim. In addition to the closings, it announced that revenue at stores open at least a year fell 5.2 percent for the eight weeks ended Dec. 25, a crucial time because of the holiday shopping season.
Kmart's layaway program, meant to help cash-strapped customers buy presents by paying for them a little at a time, faltered as Wal-Mart and Toys R Us introduced or expanded competing programs. Sears stores reported softer sales of home appliances, usually a strength.
The company predicted that fourth-quarter adjusted earnings will be less than half the $933 million reported for the same quarter last year. It also expects a non-cash charge of $1.6 billion to $1.8 billion in the quarter to write off the value of carried-over tax deductions it now doesn't expect to be profitable enough to use.
Part of Sears Holdings' problem is the weak economy that is hurting virtually all retailers that cater to low- and middle-income shoppers, who are being forced to cut back on spending.
But both Lampert and Lou D'Ambrosio, who was named chief executive officer in February, have said the company needs to keep up with the changing retail landscape, where shoppers are going online for convenience and finding better prices on their smartphones even once they're in the store.
The Associated Press contributed to this story