Correction: Sears-Results story

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Posted: Feb 27, 2015 10:49 AM
Correction: Sears-Results story

NEW YORK (AP) — In a story Feb. 27 about Sears Holdings Corp., The Associated Press reported erroneously that Chief Financial Officer Rob Schriesheim said in a statement that the actions Sears took in 2014 — such as store closures and inventory reduction — generated $2.3 billion in liquidity.

Sears says the actions that generated that cash included: the spinoff of Lands' End, domestic real estate transactions, a rights offering for senior unsecured notes with warrants, a short-term loan secured by certain real properties and a rights offering for 40 million common shares in Sears Canada.

A corrected version of the story is below:

Sears 4Q loss narrows, sales slide as business shifts

Sears 4th-quarter loss narrows but sales fall sharply as it sheds assets

By MICHELLE CHAPMAN

AP Business Writer

NEW YORK (AP) — Sears recorded its fourth straight year of falling profit and revenue, even as cost cutting and store closures helped narrow its loss for the fourth quarter.

The Hoffman Estates, Illinois-based company, which runs Kmart and its namesake stores, has been closing stores, selling assets and slashing inventory as it continues with efforts to turn around its business. But the retailer and its CEO and chairman, Edward Lampert, still face challenges.

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 undergone seismic shifts in recent years and the tie-up hasn't gelled.

To try to get back on track, Sears has shifted its focus from running a store network to operating an online and offline business tied together by its Shop Your Way loyalty program. Sales to Shop Your Way members accounted for 72 percent of eligible sales for the fourth quarter — the same as in the third quarter.

Lampert said in a letter to shareholders, employees and members that without the aggressive steps the company has taken, "we would be stuck on the same path that has claimed retailers like Circuit City, Borders, Radio Shack and others."

"Our only option is to become better equipped to support, anticipate and exceed our members' needs," he said.

Sears lost $159 million, or $1.50 per share, for the period ended Jan. 31. A year earlier it lost $358 million, or $3.37 per share.

Revenue declined to $8.1 billion from $10.59 billion after the sale of most of stake in its Canadian unit, the spinoff of Lands' End, and the closure of more Kmart and Sears stores. That helped to trim costs and expenses to $8.23 billion, from $10.73 billion last year.

Sales at Sears stores open at least a year fell 7 percent. For Kmart, the metric slipped 2 percent. Both Sears and Kmart were hurt by weak consumer electronics sales.

The company's plans to form a real estate investment trust are moving forward and it expects it to create and separate that company in May or June. It anticipates between 200 and 300 Sears and Kmart stores being sold to the REIT, with proceeds estimated to be more than $2 billion.

Sears Holdings Corp. has more than 1,700 Sears and Kmart stores. It had 3,523 stores just five years ago.

For the year, Sears' loss widened to $1.68 billion, or $15.82 per share, from a loss of $1.37 billion, or $12.87 per share, in the prior year. Revenue fell to $31.2 billion from $36.19 billion.

The retailer closed about 234 underperforming Kmart and Sears stores in 2014, with the majority being Kmart stores.

Sears said Thursday that it had about $800 million available under its credit facility and $250 million in cash at quarter's end. Chief Financial Officer Rob Schriesheim said in a statement that the actions it took in 2014 generated $2.3 billion in liquidity. These actions included the Lands' End spinoff, domestic real estate transactions, a rights offering for senior unsecured notes with warrants, a short-term loan secured by certain real properties and a rights offering for 40 million common shares in Sears Canada.

Sears also announced that it is amending and extending a $400 million short-term loan that it took out in September from a hedge fund run by Lampert. The company said it will now repay $200 million of the loan on Monday. The remainder of the loan was extended until June 1 or until the company receives proceeds from the potential REIT transaction, whichever is soonest.

Total long-term debt rose to $3.2 billion from $2.9 billion a year earlier.

Its shares slipped 90 cents, or 2.4 percent, to $37 in premarket trading shortly before the market open.