Sears stores in California to close

Three Sears stores in California are among 79 stores nationwide slated to be closed after a dismal holiday season prompted Sears Holdings Corp. to retool its strategy.

The Illinois retailer on Thursday posted a list of 41 Sears and 38 Kmart outlets targeted for closure, the first wave of the 100 to 120 stores the company plans to shut down.

Two Sears stores in San Diego and one in El Monte will close at a date to be determined. No Kmart stores in the state are on the list.

Competitors such as Wal-Mart Stores Inc. and Target Corp. have been better at wooing bargain hunters with on-trend merchandise and more pleasant shopping experiences, industry watchers said.

Analysts think Sears Holdings, which has suffered more than four years of sales declines, may be headed for bankruptcy unless it takes drastic action to upgrade its stores and revamp its merchandise.

The company is controlled by billionaire financier Edward Lampert. He bought Kmart out of Chapter 11 in 2003 and brought Sears, Roebuck & Co. into the fold two years later in an $11.5-billion deal.

As board chairman, Lampert has held down costs by cutting investment in stores and reducing product assortment, decisions that analysts say won short-term profits at the expense of long-term growth.

After domestic sales dropped 5.2% in the two months leading up to Christmas, Sears announced a new strategy directing resources away from “marginally performing” stores and toward more profitable shops. It plans to sell or sublease the spaces occupied by closing stores.

The company said Tuesday that lackluster holiday sales coupled with rising costs would slash fourth-quarter earnings to less than half the $933 million it reported a year earlier.

The list of closing stores can be found at .

Sears shares fell 43 cents, or 1.3%, to $32.90 on Thursday.

shan.li@latimes.com