January 10, 2018 / 12:39 PM / 9 days ago

Sears raises $100 million in new funding, sees holiday sales drop

(Reuters) - Sears Holding Corp (SHLD.O) said on Wednesday it received $100 million in new funding as it tries to shore up cash to stay afloat after years of losses, and that its sales plunged in the key holiday season.

The company, once the largest U.S. retailer, is saddled with $3.3 billion in debt and trying to boost liquidity after warning last March it had doubts it could continue as a going concern.

Sears shares jumped as much as 7 percent as the cash injection and a forecast for a narrower fourth-quarter loss overshadowed the 16 percent to 17 percent drop in comparable-store holiday sales.

Sears, led by billionaire Eddie Lampert, also said it was in talks with lenders to reduce interest expense and extend maturities on more than $1 billion of its debt.

The retailer is also continuing to try to complete a $600 million financing deal that would release properties now protected by its pensioners and relieve it for two years of contributions to the plan, which has a deficit of about $1.6 billion.

But the operator of Sears and Kmart stores warned that if it fails to complete those financing deals, it will consider “all other options to maximize the value of its assets.”

Sears has been aggressively shuttering stores and cutting jobs in a bid to return to profitability in 2018 after six years of losses. It said on Wednesday that it expects additional savings of $200 million, unrelated to store closures.

“While the company has managed to stay afloat by selling and spinning off its real estate assets to generate cash, the chance of a turnaround seems bleak,” Morningstar analyst Steve Jellinek said.

Last week, Sears said it would close another 103 unprofitable Kmart and Sears stores, on top of the 63 it plans to close this month.

    For the fourth quarter, the company said it expects a net loss of $200 million to $320 million, excluding charges from closing stores, severance and tax-related matters.

    That compares with a net loss of $607 million the same period a year earlier.

    The $100 million funding deal is backed by land leases and select intellectual property. The company added that it would be entitled to raise a further $200 million under certain conditions.

    Sears also said it won concessions from lenders that allow it to borrow more money based off of the value of its inventory.

    Shares of the company, whose going-concern warning epitomized the troubles of America’s biggest traditional retailers, tumbled more than 60 percent in 2017.

    Reporting by Siddharth Cavale and Vibhuti Sharma in Bengaluru; additional reporting by Jessica DiNapoli in New York; Editing by Meredith Mazzilli

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