Sears to Raise Up to $770 Million With Store Sales, Split

Thursday, 23 February 2012 01:49 PM

(Updates with share price in fourth paragraph.)

Feb. 23 (Bloomberg) -- Sears Holdings Corp. plans to raise as much as $770 million by selling 11 store sites and separating some smaller-format businesses after posting its largest quarterly loss in at least nine years. The shares surged.

The rights offering to separate the Hometown and Outlet shops and some hardware stores may raise $400 million to $500 million, Hoffman Estates, Illinois-based Sears said today in a statement. The 11 sites will be sold to General Growth Properties for about $270 million, the retailer said.

Sears, controlled by hedge-fund executive Edward Lampert, has invested less money in stores than competitors as declining sales sap its earnings. The company said Dec. 27 it would close as many as 120 Sears and Kmart stores to generate as much as $170 million in cash from inventory and lease sales.

Sears rose 17 percent to $60.71 at 9:32 a.m. in New York and earlier climbed as much as 18 percent for the biggest intraday gain since May 22, 2009. The shares tumbled 56 percent last year.

The company today also reported a fourth-quarter net loss of $2.4 billion, or $22.63 a share, compared with net income of $374 million, or $3.43 a year earlier. The fourth-quarter loss was the company’s largest since at least the quarter ending in October 2002. Sales fell about 4 percent to $12.5 billion, Sears said.

“We are taking immediate actions to address our fourth- quarter performance, including cost and inventory reductions,” Chief Executive Lou D’Ambrosio said in the statement.

1,250 Stores

In his annual investor letters, Lampert has identified the Hometown and Sears Outlet stores as sources of growth and profit. About 1,250 of those locations are included in the separation announced today, Chris Brathwaite, a spokesman, said today in an e-mail.

The Hometown stores are built partly around Sears’s Craftsman, Diehard and Kenmore brands. The latter two continue to lead their categories, and Craftsman has lost some market share to private-label rivals. While Sears as a whole has ceded some appliance sales to Home Depot Inc., it remains the leader.

--Editors: Kevin Orland, James Callan

To contact the reporter on this story: Lauren Coleman-Lochner in New York at llochner@bloomberg.net

To contact the editor responsible for this story: Robin Ajello at rajello@bloomberg.net

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