Tags: sears | funding | retail | loss

Sears to Consider 'All Options' If Efforts to Refinance $1B Fail

Sears to Consider 'All Options' If Efforts to Refinance $1B Fail
(Kevinbrine/Dreamstime)

By    |   Wednesday, 10 January 2018 09:37 AM

Sears Holding Corp. reportedly has warned that it will consider "all options" if efforts to refinance $1 billion fail.

Sears said Wednesday it has secured more financing, and is eying more cost cutting, as the beleaguered retailer reported a sales drop during the critical holiday season.

Sears is pushing to return to profitability and will continue to explore ways to monetize its other assets, management said.

The company said it's in talks with certain lenders about transactions that would strengthen Sears' balance sheet and could potentially improve the terms on more than $1 billion of debt, CNBC reported. This would help the department store chain reduce cash interest expenses and extend maturities.

The company, which operates Sears and Kmart stores, said Wednesday that it secured $100 million in new financing, will seek twice that from other sources, and will attempt $200 million in additional cost cuts this year unrelated to store closings.

Sears also said that if the company's efforts to complete these transactions are not fully successful, then the board will consider all other options to maximize the value of its assets.

Shares rose more than 8 percent before the opening bell.

Sears, which said last week it's closing more than 100 stores, said that during the November and December period, comparable-store sales tumbled by 16 percent to 17 percent.

The metric — which measures sales in stores open at least a year — is a key indicator of retailer's health.

Sears' disastrous holiday sales mark a sharp contrast to the solid gains enjoyed by many of its department store peers such as Kohl's, J.C. Penney and Macy's.

Many retailers are enjoying the benefits of a stronger economy and lower unemployment. But they're also seeing their efforts to spruce up their stores while expanding online services helping to boost their business.

In comparison, Sears hasn't kept up with Walmart, Best Buy and Home Depot in investing in its stores, with its shabby fleet its biggest albatross. Moreover, its peers like J.C. Penney are going after Sears' core appliance business. Sears has been trying to increase cash reserves while it cuts costs, moves that seem more urgent after it raised doubts in a regulatory filing last March that it may not continue as a going concern.

However, it insisted at the time that its actions to turn around the business should help reduce that risk.

The inability to revive sales has created tension with vendors who have grown apprehensive about payment. Sears, based in Hoffman Estates, Illinois, just outside of Chicago, has not reported an annual profit since 2011, and sales have been in decline for a decade.

In fact, Sears announced in October that it will no longer sell Whirlpool appliances, ending a business relationship that dates back more than 100 years. That includes the larger appliances and small kitchen appliances of Whirlpool subsidiaries like Maytag, KitchenAid and Jenn-Air.

It said Whirlpool was making demands that would've made it difficult to sell its appliances at a competitive price.

The hedge fund of Chairman and CEO Edward Lampert has forwarded millions in funding to keep Sears open. He said Wednesday that broader changes to the company's capital structure and business model were required.

"While these actions have so far helped our company survive the so-called 'Retail Apocalypse,' many observers are not persuaded that Sears Holdings can be a viable competitor in the long term," Lampert wrote in a blog post.

"It is obvious that to overcome such skepticism and obtain the support of outside lenders and our vendor community - which is crucial to the success of any retailer - we need to undertake further measures."

The goal, Lampert said, is to return Sears to profitability this year.

Shares fell sharply in regular trading Tuesday, striking an all-time low of $3.09.

(Newsmax wire services Reuters and the Associated Press contributed to this report).

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Sears Holding Corp. reportedly has warned that it will consider "all options" if efforts to refinance $1 billion fail.
sears, funding, retail, loss
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2018-37-10
Wednesday, 10 January 2018 09:37 AM
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