Sears losses top $600m as sales collapse, debt mounts
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Sears continued to bleed red ink during the fourth quarter, with the struggling US department store operator posting a net loss of more than $600m, bringing total losses to over $10bn in six years.
The company, which also owns Kmart, saw net losses swell to $607m in the three months to end of January, compared to a loss of $580m a year ago as cratering sales and mounting debt forced it to take yet another big writedown.
Of the $409m in impairments it booked during the fourth quarter, $381m were related to the write down of the value of its brand. It made a similar write down of $180m during the fourth quarter of 2015.
The losses come as sales continue their dramatic slide. Like-for-like sales, a key industry metric – tumbled 10.3 per cent during the quarter. That along with sales losses resulting from store closures dragged total group revenue down by 17 per cent to $6bn.
Once one of the largest US retailers, Sears has struggled to turn a profit in recent years as Americans increasingly shop online rather than in shopping centres.
Total long-term debt climbed to $4.2bn at the end of January, up from the $3.7bn reported at the end of October and nearly two times more than the $2.2bn reported in the prior year period.
By contrast, Sears’s market value stood at only $792m at Wednesday’s close.
In a bid to stabilise its finances, the company has been selling assets, amended its credit facilities with lenders and is looking to cut costs by $1bn. It has also received loans from affiliates of ESL Investments, the hedge fund run by Sears’ chief executive Eddie Lampert.
The shares, which fell to a record low of $5.50 last month, rose more than 5 per cent in pre-market trading.