Tags: sears | lampbert | retailer | debt | real estate

Sears CEO: Retailer Must Sell More Real Estate to Cut Debt and Survive

Front of a sears store in photo taken from parking lot of blue sigh and white facade.

Monday, 24 September 2018 11:42 AM

Sears Holdings Corp. would have to sell more real estate and restructure its debt, Chief Executive Officer Eddie Lampert’s hedge fund said in a regulatory filing, as the retailer looks to avoid bankruptcy.

The company’s shares (SHLD.O) fell 7 percent in morning trading. They have lost 67 percent of their value since the start of the year. The stock was worth $30 in 2015 and now trades at just over a dollar.

The one-time American retail giant has struggled to transform its business in the face of declining foot traffic at brick-and-mortar stores and this month again warned about its ability to continue as a going concern.

To avoid bankruptcy, loss-making Sears last year sold its Craftsman tool brand to power tool maker Stanley Black & Decker (SWK.N) for $900 million and signed a deal to sell Kenmore appliances on Amazon.com (AMZN.O).

The company is considering selling its storied Kenmore appliance brand and home improvement business to Lampert’s hedge fund, ESL Investments Inc, for as much as $480 million.

The hedge fund, in a filing made public on Monday, urged the retailer’s board to sell $1.5 billion more in real estate and restructure $1.1 billion in debt.

Sears is currently saddled with $5.59 billion in debt, excluding convertible debt. That debt load could be reduced to $1.24 billion with the proposed transactions and restructuring, ESL said in the filing here

Sears said it has referred ESL’s proposal to the special committee exploring the hedge fund’s proposal to acquire Kenmore.

Sears earlier this month again warned that it could go out of business. 

“It is imperative that the Company reduce debt, adjust its debt maturity profile and eliminate the associated cash interest obligations,” Lampert said earlier this month in a blog post on the company’s website.

“We continue to believe that it is in the best interests of all our stakeholders to accomplish this as a going concern, rather than alternatives that could result in significant reductions in value.”

It was the second time in two years that Sears has expressed doubt about its business continuing as its losses mount.

“This year’s statement regarding its ability to remain a going concern is more dire,” Ken Perkins, president of Retail Metrics Inc. “It has liquidated its best assets and the cupboard is bare. These losses are unsustainable.”

Sears said 149 stores will close in the second half of this year.

“Sears has closed hundreds of underperforming stores so its same-store sales should be much better than they have been as only their ‘stronger’ performing stores are in the mix,” said Perkins.

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Sears Holdings Corp's Chief Executive Officer Edward Lampert's hedge fund has urged the retailer to sell more real estate, as part of a plan to cut about $1.5 billion of its debt, according to a regulatory filing.
sears, lampbert, retailer, debt, real estate
Monday, 24 September 2018 11:42 AM
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