2016 is ending on what has become a familiar note for Sears.
As it prepares to close more stores, the struggling retailer has secured a letter of credit. Once again, ESL Investments, Inc.—for which Edward Lampert, Sears Holdings Corporation’s chairman and CEO, is also the chairman and CEO—has come to the rescue. Citibank, N.A. served as administrative agent and issuing bank.
The secured standby letter of credit is for an initial amount of $200 million, which may be expanded up to a total of $500 million. The move provides the parent company of Sears and Kmart stores with liquidity to continue operations.
“This new standby letter of credit facility further demonstrates that Sears Holdings has numerous options to finance our business strategy,” said Jason M. Hollar, Sears Holdings’ chief financial officer.
This comes just one day after Business Insider reported more than 30 Sears and Kmart stores will shutter in early 2017. The locations include 24 Kmart doors and eight Sears stores across nine states.
The move brings the total closures for the former retail powerhouse to 200 in this fiscal year. That’s a 60 percent drop since 2011, when the company operated more than 3,500 stores.
The closures are an attempt to cut overhead and slow losses. In its third quarter report, released December 8th, the company posted a net loss of $748 million for the quarter, compared to a $454 million loss for the prior year period. Revenues fell $721 million to $5 billion.
Comparable store sales fell by 4 percent and 10 percent at Kmart and Sears, respectively, for the same period.
At the time, Hollar assured investors that the retailer was committed to managing business and meeting financial obligations.
Against the backdrop of the well documented challenges facing apparel retail in general and department stores specifically, Macy's, Kohl's and Neiman Marcus are all experiencing high-profile changes in the C-Suite.Read more
The British apparel retailer is the latest company to be prosecuted under the False Claims Act for skirting applicable customs duties.Read more
Walmart is rolling out new apparel brands across categories to shore up its position against Amazon as its sales in the sector continues to grow.Read more
Apparel companies historically have struggled with ethics and compliance, especially in sourcing and supply chain operations.Read more
VF Corp. said it will reinvest roughly $100 million back into its business to make it more agile and consumer focused, even while dealing with implications of the new Tax Act on its multinational operations.Read more