The Trump administration’s new tax law has been a boon to Sears’ bottom line.
Thanks to a non-cash tax benefit of upward of $495 million, the company expects to show a rare profit of as much as $240 million for the fourth quarter, ended Feb. 3, vs. a year-ago loss of $607 million.
The preliminary results, disclosed in an 8-K filing as part of a debt refinancing plan, also include a non-cash impairment charge related to Sears’ trade name of between $50 and $100 million.
The retailer also credited its plus-column results to last year’s $1.3 billion cost-cutting initiative. That effort included layoffs; shutting unprofitable stores; streamlining operations and the organizational structure; and trimming unprofitable categories including consumer electronics.
See: Sears Starts Restructuring
But the bottom-line boost belies dismal retail sales during the all-important holiday season. Sears expects that total revenue fell 28 percent, to $4.4 billion, for the period, which contains an extra selling week due to calendar shifts.
More telling, total comp sales, which exclude the impact of store closures, fell 15.6 percent, comprised of a 12.2 percent decrease at Kmart and an 18.1 percent drop at Sears.
The company is expected to report its formal Q4 and full-year results next month.
