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Sears reports $2.4-billion loss but plans to sell stores

Sears' CEO calls the $2.4-billion fourth-quarter loss 'unacceptable.' The retailer plans to spin off some stores and sell or close others to raise nearly $800 million.

February 24, 2012|By Tiffany Hsu, Los Angeles Times
  • Even before Thursday's report of a $2.4-billion quarterly loss, Sears planned to close up to 120 stores.
Even before Thursday's report of a $2.4-billion quarterly loss,… (Amy Sancetta, Associated…)

Sears Holdings Corp.posted a $2.4-billion loss in its fourth quarter but appeased investors by saying it would sell or spin off many of its stores to boost liquidity.

The Hoffman Estates, Ill., company that was once a shining beacon in U.S. retail reported a loss of $22.63 a share in the quarter that ended Jan. 28 — compared with a loss of $374 million, or $3.43 a share, in the same quarter a year earlier. Chief ExecutiveLou D'Ambrosio deemed the quarterly result "unacceptable."

But the company announced plans that could raise nearly $800 million.

In one arrangement worth up to $500 million, Sears said it would spin off its Hometown and Outlet brands, as well as some hardware stores, through a rights offering.

Separately, for $270 million, Sears said it would sell 11 stores to real estate company General Growth Properties in a deal expected to close within the next 60 days. None of the stores are in California.

The initiatives helped Sears stock soar nearly 19%, or $9.72, to $61.80 on Thursday.

Sears said in December that it would close up to 120 stores after struggling through a difficult holiday season.

In its fourth quarter, Sears' revenue slumped 4% to $12.5 billion, which the company blamed in part on declining demand for consumer electronics and appliances. Also, unseasonably warm weather damped outerwear sales from the company's Lands' End brand.

Sales at U.S. locations open more than a year slid 4.1% at Sears and 2.7% at Kmart, which the company also owns, over the quarter.

D'Ambrosio said that, moving forward, the company would try to leverage technology to better connect with customers who are increasingly using smartphones to shop.

"Our media and shopping channels are blurring," he said in a conference call with analysts. "We believe the retailers who best use technology to integrate the customer experience across all channels will be the ones who win."

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