By Thomson Reuters – Re-Blogged From Newsmax
Sears Holdings Corp. reported a smaller decline in quarterly same-store sales, but warned again that there is doubt about the company’s continued operation as it awaits approval to sell some of its businesses to its chief executive’s hedge fund.
“It is imperative that the Company reduce debt, adjust its debt maturity profile and eliminate the associated cash interest obligations,” Chief Executive Edward Lampert said 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.”
Sears is working to transform its business by selling brands like tool line Craftsman and building a stronger online presence. Its market share has been hurt by discount chains including Walmart (WMT.N), and the surge in popularity of online shopping has added to its woes.
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 declined to comment.
Sales at Sears’ established stores, including Kmart discount shops, fell 3.9 percent in its second quarter, compared with a drop of 11.9 percent in the first quarter, a positive sign sending the 125-year-old retailer’s shares up 28 percent in extended trading.
“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.
Sears said 149 stores will close in the second half of this year.
The company’s net loss widened to $508 million in the fiscal second quarter ended Aug. 4, from $250 million a year before, the company said in a statement.
To shore up its finances, 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.
Last month, Lampert said he could close on a deal for the businesses with an unnamed partner by late August.
Sears’ special committee and a majority of disinterested shareholders must approve the sale to ESL. The company has tried to sell these assets before without success.
The company said that some of its efforts to raise cash, including the sale of Kenmore and its home improvement business to Lampert, were at too early a stage to be counted for its quarterly earnings released on Thursday. However, it said if it finalizes its plans to bolster liquidity, and completes discussions with lenders, it will be able to remain in business.
Sears’ stock (SHLD.O), which traded at about $100 a share more than a decade ago, closed down 9 percent at $1.21 while investors awaited the results, which had been expected to be released earlier on Thursday.