Sears shedding some stores, reports 4Q loss
Sears Holdings Corp. reported Thursday that it will spin off its smaller hometown and outlet stores as well as some hardware stores in a deal expected to raise $400 to $500 million as it seeks to regain profitability.
The announcement came when the Hoffman Estates-based company reported a big quarterly net loss. Sears reported a loss of $2.4 billion, compared with a profit of $374 million a year earlier.
Sears CEO and President Lou D'Ambrosio sent a letter to employees Thursday morning explaining the plan to separate the businesses and offered encouragement to employees. He said in the letter, “We, as a team are capable of doing much better and together we're going to turn around our company.”
He said the company is “prepared to take whatever steps are necessary — from improving our operations to unlocking the value of our assets to accelerating our integrated retail execution — as we drive our transformation and restore our company to greatness.” The operator of Sears and Kmart also says will sell 11 stores to the real estate company General Growth Properties for $270 million.
The disclosures of the store plans came as Sears reported it swung to a loss in the fourth-quarter while revenue fell 4 percent to $12.48 billion. Adjusted earnings totaled 54 cents per share, below analyst expectations.
In a call with analysts, D'Ambrosio said results were “unacceptable.”
“We know that and are taking immediate actions to address it,” he said.
Results were hurt by high costs for cotton and fuel, unseasonable weather that led to lower sales of winter gear and low consumer demand for two of its biggest categories, appliances and consumer electronics, the company said.
Led by billionaire investor Edward Lampert, Sears has suffered losses as consumers turn elsewhere. It has sought to improve results by cutting jobs and costs and closing underperforming stores.
Net loss for the three months ended Jan. 28 amounted to $2.4 billion, or $22.47 per share. That compares with net income of $374 million, or $3.43 per share, a year ago.
Excluding a $2.5 billion in charges related to a required reserve related to deferred tax assets, impairment charges and costs related to close stores and severance, net income was 54 cents per share. Analysts expected much higher adjusted earnings of 76 cents per share.
Revenue fell 4 percent to $12.48 billion from $13 billion last year. Analysts expected $12.44 billion.
— Daily Herald Business Writer Kim Mikus and The Associated Press contributed to this report.