Sears's shares soar on REIT, sale/leaseback plan

Sears Holdings Corp. jumped the most in more than a decade after saying it's considering the sale and leaseback of 200 to 300 stores, aiming to strengthen its balance sheet after nine straight quarterly losses.

The selected outlets would be sold to a newly formed real- estate investment trust, the Hoffman Estates-based company said today in a statement. Sears would continue to operate stores in the locations sold to the REIT under leases, and the plan could ultimately be extended to include most of its locations. The company also would let shareholders purchase stock in the trust.

Edward Lampert, Sears's chief executive officer and its biggest investor, has been spinning off assets to raise cash as he charts a comeback plan. Sears, which operates about 1,800 stores, has sprawling real-estate holdings. If the company completes a REIT deal, it may ultimately own 400 to 500 stores and lease the remainder, Chief Financial Officer Rob Schriesheim said on the company's blog.

"We would realize substantial proceeds from such sale, which would further enhance our liquidity," Schriesheim said.

Sears jumped as much as 48 percent to $48.25 in New York, the biggest intraday gain since May 2003. Before the surge, the shares had declined 13 percent in the past six months.

Last month, Sears announced plans to lease space in the Northeast to Primark Stores Ltd., a British budget-clothing retailer that's expanding in the U.S.

Sears also announced a rights offering in October, giving it more time to return to profitability. The operator of the Kmart and Sears department-store chains stores aims to raise a total of as much as $2.07 billion this year if rights offerings are fully subscribed, according to a blog post last month. Fitch Ratings calculated in September that the company would need $4 billion of capital to avoid running out of cash in 2016.

Small Drop

Comparable-store sales fell 0.1 percent in the fiscal third quarter, which ended Nov. 1, Sears said today. That compared with a 0.6 percent drop for the first nine months of the year.

Sears has been closing some stores as Lampert seeks to create a leaner merchant focused on its digital operations and loyalty program. While the retailer has been a leader in adding features such as expedited in-store pickup for online orders, that hasn't translated into higher traffic or sales. Sears has posted only one quarter of positive same-store sales, considered a key gauge of performance, since Lampert merged Sears Roebuck & Co. and Kmart Holding Corp. in March 2005.