Despite the lifeline CEO Edward Lampert just threw out (again) to save Sears, the company said it’s closing another 150 stores.
In a statement Thursday, Sears said it will close an additional 150 non-profitable stores (108 Kmart locations and 42 Sears stores) in an effort to curb considerable losses. The stores generated $1.2 billion in sales over the last year but amassed losses of $60 million in the same period.
“We are taking strong, decisive actions today to stabilize the company and improve our financial flexibility in what remains a challenging retail environment,” Lampert said. “The decision to close stores is a difficult but necessary step as we take actions to strengthen the company’s operations and fund its transformation.”
Sears also said Thursday that it sold its Craftsman Brand to Stanley Black & Decker for $525 million at closing, $250 million at the end of three years and payments to Sears between 2.5% and 3.5% on sales of Craftsman products for 15 years.
Both announcements follow Sears’ news that it had secured a $500 million loan from ESL Investments, the hedge fund its CEO owns and has loaned from before to keep Sears afloat.
In its third quarter 2016 report released Dec. 8, Sears said its net losses totaled $748 million compared to $454 million the prior year period. Revenues were down $721 million and comparable store sales at Sears fell 10 percent in the quarter. Sears attributed the dip in sales to declines in home appliances, apparel and consumer electronics—essentially all of its major categories.
On top of that, Sears had $3.7 billion in long-term debt as of the end of October.
One analyst is giving the retailer another six months to live.
“While Sears Holdings is trading at its lowest level since 2003 now, I think any potential bankruptcy filing is unlikely to happen until at least mid-2017 or later,” an analyst from Elephant Analytics wrote in Seeking Alpha. “Seasonal changes in inventory levels plus inventory conversion to cash from closing stores can probably offset Sears’ losses up to Q2 2017. After that point, Sears will likely need to find $1+ billion in order to make it through the 2017 holiday season.”
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