NEW YORK -- Sears Holdings Corp. announced Friday that it will take measures to cut costs by at least $1 billion a year, just weeks after it said it would close 150 stores.
The company, which also owns Kmart, also said it was adding $140 million in liquidity by reworking its debt, giving the company more breathing room.
The Hoffman Estates, Ill., retailer, which has been losing money for years, also said comparable-store sales during the Christmas shopping season weren't as bad as industry analysts had believed them to be.
Shares of Sears Holding Corp., which are down 40 percent this year, soared 30 percent at Friday's opening bell. The shares rose $1.42, or 26 percent, to close Friday at $6.96.
Sears announced last month the closing of 150 of its 1,500 stores. It did not announce new store closures Friday, but said it would "actively manage our real estate portfolio to identify additional opportunities."
It may also sell two of its brands -- Kenmore appliances and DieHard car batteries -- after striking a deal last month to sell its popular tool brand Craftsman.
Sears has been working to streamline its organization structure, but the company did not release any details about its new effort to cut costs. Sears had about 178,000 employees in the U.S. last year.
From November to January, Sears expects sales to have fallen 10.3 percent at its stores. That's better than the drop of 13.1 percent that Wall Street had expected, according to FactSet.
"We believe the actions outlined today will reduce our overall cash funding requirements and ensure that Sears Holdings becomes a more agile and competitive retailer with a clear path toward profitability," Chief Executive Officer and Chairman Edward Lampert said in a company release.
Lampert, whose hedge fund has forwarded millions of dollars to keep Sears afloat, has long pledged to turn the company's fortunes around and that the retailer would find ways capitalize on its best-known brands, as well as its vast real estate holdings.
Lampert, a billionaire hedge fund manager, combined Sears and Kmart in 2005, about two years after he helped bring Kmart out of bankruptcy. But the retail landscape has changed since then.
While Amazon.com had been up and running for almost a decade at that time, the disruption in retail went into full force around the time of the recession a few years later.
But Sears' troubles reach deeper than that, having to compete on appliance sales with Home Depot and to match the cut-rate prices at discount chains such as Wal-Mart.
And old rivals have made it tougher. J.C. Penney reintroduced major appliances on to its floors more than 30 years after abandoning the sale of refrigerators and stoves.
Moody's Investors Service cut Sears' credit rating deeper into junk territory last month, citing large operating losses and uncertainty about whether Sears can get back to break-even.
As part of the turnaround effort, Sears will analyze data to improve its product selection. It also will focus on the most profitable items, the company said. Lampert's bid to retool Sears has hinged on a rewards program called Shop Your Way, which is designed to unify Sears stores and e-commerce stores.
"We are initiating a fundamental restructuring of our operations," Lampert said in a statement. "We plan to reduce our corporate overhead, more closely integrate our Sears and Kmart operations and improve our merchandising, supply chain and inventory management."
Information for this article was contributed by Anne D'Innincenzio and Joseph Pisani of The Associated Press and by Molly Smith, Emma Orr and Lauren Coleman-Lochner of Bloomberg News.
Business on 02/11/2017