Correction: Sears Holdings Corp. Chief Financial Officer Rob Schriesheim said in a statement Thursday that the actions the company took in 2014 generated $2.3 billion in liquidity. The actions included the Lands’ End spinoff, domestic real estate transactions, a rights offering for senior unsecured notes with warrants, a short-term loan secured by certain real properties and a rights offering for 40 million common shares in Sears Canada. This Associated Press story incorrectly described the source of the $2.3 billion.
NEW YORK -- Sears Holdings on Thursday posted a $159 million fourth-quarter loss as store closings and asset sales shrank the company and reduced revenue.
It was Sears' fourth straight year of falling profit and revenue, even as cost cutting and store closures helped narrow its fourth-quarter loss.
The Hoffman Estates, Ill.-based company has been closing stores, selling assets and lowering inventory as it continues with efforts to turn around its business.
Sears' chief executive officer and chairman, Edward Lampert, a billionaire hedge-fund manager, combined Sears and Kmart in 2005, about two years after he helped bring Kmart out of bankruptcy.
To try to get back on track, Sears has shifted its focus from running a store network to operating an online and offline business tied together by its Shop Your Way loyalty program. Sales to Shop Your Way members accounted for 72 percent of eligible sales for the fourth quarter -- the same as in the third quarter.
Lampert said in a letter to shareholders, employees and members that without the aggressive steps the company has taken, "we would be stuck on the same path that has claimed retailers like Circuit City, Borders, Radio Shack and others."
"Our only option is to become better equipped to support, anticipate and exceed our members' needs," he said.
Sears lost $159 million, or $1.50 per share, for the period ended Jan. 31. A year earlier it lost $358 million, or $3.37 per share.
Revenue declined to $8.1 billion from $10.59 billion after the sale of most of its stake in its Canadian unit, the spinoff of Lands' End, and the closure of more Kmart and Sears stores. That helped to trim costs and expenses to $8.23 billion, from $10.73 billion last year.
Sales at Sears stores open at least a year fell 7 percent. For Kmart, the metric slipped 2 percent. Both Sears and Kmart were hurt by weak consumer electronics sales.
The company's plans to form a real estate investment trust are moving forward and it expects it to create and separate that company in May or June. It anticipates between 200 and 300 Sears and Kmart stores being sold to the real estate investment trust, with proceeds estimated to be more than $2 billion.
"It's all about liquidity," Matt McGinley, an analyst at Evercore ISI in New York, said in a telephone interview before the results were released. "Really all that matters is how they converted their performance into free cash flow." His firm recommends selling the shares.
Sears Holdings Corp. has more than 1,700 Sears and Kmart stores. It had 3,523 stores just five years ago.
For the year, Sears' loss widened to $1.68 billion, or $15.82 per share, from a loss of $1.37 billion, or $12.87 per share, in the prior year. Revenue fell to $31.2 billion from $36.19 billion.
The retailer closed about 234 underperforming Kmart and Sears stores in 2014, with the majority being Kmart stores.
Sears said Thursday that it had about $800 million available under its credit facility and $250 million in cash at quarter's end. Chief Financial Officer Rob Schriesheim said in a statement that the actions it took in 2014 -- such as store closures and inventory reduction -- generated $2.3 billion in liquidity.
Sears also announced that it is amending and extending a $400 million short-term loan that it took out in September from a hedge fund run by Lampert. The company said it will now repay $200 million of the loan on Monday. The remainder of the loan was extended until June 1 or until the company receives proceeds from the potential real estate investment trust transaction, whichever is soonest.
Total long-term debt rose to $3.2 billion from $2.9 billion a year earlier.
Its shares slipped $1.85, or 4.9 percent, to close Thursday at $36.05.
Information for this article was contributed by Lauren Coleman-Lochner of Bloomberg News.
Business on 02/27/2015