Sears raises $100M in new financing, eyes $200M in cost cuts
Sears has secured more financing, and is eyeing more cost cutting, as the beleaguered retailer reported a big sales drop during the critical holiday season.
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. It also warned that if the company’s efforts to complete those transactions are not fully successful, then the board will consider all other options to maximize the value of its assets.
Sears Holdings Corp., 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 a retailers’ 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 the likes of Walmart, Best Buy and Home Depot in investing in its stores.
Sears Holdings closed the last of its Kmart stores in metropolitan Chattanooga last year and is closing its Kmart store at 1203 Cleveland Road in Dalton, Ga., on Jan. 28 and it’s shutting down the last remaining Kmart
in the region at 1308 W. Walnut Ave. in Dalton in early March.
Sears previously closed its Sears outlets in Dalton, Ga., and Cleveland, Tenn. But Sears continues to operate department stores in the Hamilton Place and Northgate malls in Chattanooga.
Sears also announced in October 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.
Sears said Whirlpool was making demands that would’ve made it difficult to sell its appliances at a competitive price.
The discontinued appliances at Sears include ovens and stoves made by Whirlpool in Cleveland, Tenn.
As a result, J.C. Penney and other competitors 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, Ill., just outside of Chicago, has not reported an annual profit since 2011, and sales have been in decline for a decade.