Published: Thu, March 23, 2017
Medical | By Dorothy Lyons

Future unclear for Kmart and Sears

Sears Holdings Corp. said late Tuesday it lost more than $2 billion a year ago, and its historical operating results indicated doubt about the future of the company that started in the 1880s as a mail-order catalog business.

The disclosure comes after more optimistic signs from the company, which has been working on a turnaround under Chief Executive Officer Eddie Lampert.

In the wake of that statement, the price of Sears stock dipped 13.69% to $7.85 a share.

He cited a US$1 billion increase in liquidity from a new secured loan facility and a new asset-based loan that provided US$250 million more in "financial flexibility".

Sears has shuttered four Western Pennsylvania locations in recent years: Wilkins in 2013, Century II Mall in 2014, Pittsburgh Mills in 2015 and Clearview Mall last year. It's been probably 10 years that Sears holdings has been struggling in one fashion or another.

Going forward, the company expects adjusted EPS of $1.94 - $2.13 on revenue of $1.2 - $1.26 billion.

Alex Arifuzzaman, founder of retail real-estate specialist InterStratics Consultants, said the turmoil at Sears and other retailers underscores the urgency for them to transform their businesses and adapt quickly to the shifting digital times.

In January, Sears said it planned to close 150 stores.

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In other Sears Holdings Corp news, Director Fairholme Capital Management L bought 281,900 shares of Sears Holdings Corp stock in a transaction that occurred on Tuesday, March 14th. The company plans to use the profits from that sale to shore up its pension plan, which Sears acknowledges ties up a significant portion of the company's cash on an annual basis. "Sometimes multiple retailers to take those large spaces", Bell said.

Recently, Sears had put some stores into its real estate investment trust or REIT, sold Craftsman its line of tools and raised debt repeatedly from the hedge fund of CEO Edward Lampert.

Mr. Lampert owned almost 10 per cent of the real-estate investment trust that paid Sears $2.6-billion for stores that it purchased, many of which were then leased back to the retailer.

The company that operates Sears, the department store chain that dominated retail for decades, warned Tuesday that it faces "substantial doubt" about its ability to stay in business unless it can borrow more and tap cash from more of its assets.

The company said continued operating losses could restrict access to new funds under its domestic credit agreement.

The 131-year-old company lost more than $2 billion dollars last year, the AP reports.

Meanwhile, Sears continues to burn through more than $1 billion a year.

The company said it could not predict with certainty the outcome of its actions to generate liquidity.

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