Integrated retailer Transform Holdco , which owns Sears and Kmart, has announced plans to close 26 large-format Sears and Kmart stores in late October this year.

The retailer has made this decision as part of a strategic review of its portfolio with an aim to bring the company back to profitability.

The affected locations are located across California, Massachusetts, New York, Puerto Rico, Alabama, Colorado, Florida, Georgia, Illinois, Indiana, Maryland, Michigan, Missouri, Ohio, Texas, West Virginia, and Washington.

“We have faced a number of challenges returning our stores to sustainable levels of productivity, including differences with Sears Holdings over our purchase agreement and a generally weak retail environment.”

The retailer will also close the Sears Auto Centers at the affected stores later this month and will begin liquidation sales at these stores by 15 August.

The company also plans to accelerate the expansion of its smaller store formats, including the opening of additional Home & Life stores.

Transform Holdco also plans to add several hundred Sears Hometown stores following the completion of the acquisition Sears Hometown and Outlet stores.

In June this year, the retailer signed a definitive merger agreement with Sears Hometown and Outlet Stores, which is expected to close in the third quarter of this year.

Transform Holdco said: “Over the past several months, we have worked hard to strengthen our vendor relationships, return our inventory levels to normal, and improve customer satisfaction and operations.

“However, we have faced a number of challenges returning our stores to sustainable levels of productivity, including differences with Sears Holdings over our purchase agreement and a generally weak retail environment. These challenges have unfortunately affected our performance and limited our strategic choices.

“As we promised, all eligible associates will be offered the same number of weeks of severance as offered to employees of Sears Holdings Corporation prior to that company’s Chapter 11 filing in October 2018.”

The retailer noted that it plans to continue to evaluate its network of Sears and Kmart stores.