Following a long string of quarterly losses, Sears Holdings expects to report a profit for its fiscal first quarter.
In an update of its strategic restructuring activities, the company announced late last Friday afternoon that it anticipates net earnings of between $185 million and $285 million for the three months through April. Sears attributed the return to black to the sale of its Craftsman business, which brought in an initial $525 million, plus the sale of assorted real estate properties.
But to help slow its burn rate, the retailer is looking to cut another $250 million in annualized spending, on top of its current $1 billion goal, by closing 50 Sears Auto Centers and 92 Kmart pharmacies, consolidating its Sears and Kmart senior management ranks, and considering additional stores closures.
Sears has already shuttered 150 locations during the latest round of closures, and has received bids in excess of $700 million on more than 60 additional properties.
To date it has realized $700 million of the newly targeted $1.25 billion in annualized cost savings, and continues to look for ways to lower the cost of goods and improve operational efficiencies.
But longer-term trends remain challenging. The company also reported an 11.9 percent decline in combined comp sales for Sears and Kmart (a 10.8 percent decrease when excluding CE), due to weak store traffic and heightened price competition.
“Consistent with our ongoing strategy of focusing on our best stores, best categories and best members, we will continue to take difficult yet necessary actions,” said Eddie Lampert, chairman, CEO and majority shareholder. “As we sharpen our focus on profitable areas of our business, we will also continue to closely evaluate the longer-term viability of stores where a clear path to return to profitability is not in sight.”
He continued, “We are determined to take all necessary actions to improve the performance of Sears Holdings and will leverage our lease optionality to reconfigure our stores and reduce capital obligations.”
Separately, the company promoted controller and capital markets activities chief Rob Riecker to chief financial officer, succeeding Jason Hollar after six months on the job.
Hollar was
when Sears’ quarterly 10-K filing warned that “substantial doubt exists related to the company’s ability to continue as a going concern.” He later
clarified the statement in a corporate blog
.
