HOFFMAN ESTATES, Ill.,
Jan. 5, 2017 /PRNewswire/ -- Sears
Holdings Corporation (NASDAQ: SHLD) today announced a series of
additional strategic actions to increase its financial flexibility
and improve long-term operating performance. These actions will
facilitate the transformation of Sears from a store-based,
asset-intensive business model into a membership-focused,
asset-light business model. As such, the Board of Directors has
determined to:
- Close an additional 150 non-profitable stores, comprised of 109
Kmart and 41 Sears stores, to stem losses;
- Enter into an agreement to sell the Craftsman business for a
cumulative $775 million, together
with use of a perpetual license for the Craftsman brand, royalty
free for 15 years, and a 15-year royalty stream on all third-party
Craftsman sales to new customers;
- Generate up to $1 billion in
liquidity through both a newly entered $500
million real estate backed loan, secured by real estate
properties valued at over $800
million; and a previously announced standby letter of credit
facility of up to $500 million from
certain affiliates of ESL Investments, Inc., issued by Citibank,
N.A., each subject to the terms thereof;
- Market certain properties within the company's real estate
portfolio to further unlock value and increase liquidity.
"We are taking strong, decisive actions today to stabilize the
company and improve our financial flexibility in what remains a
challenging retail environment," said Edward S. Lampert, Chairman & CEO of Sears
Holdings. "We are committed to improving short-term operating
performance in order to achieve our long-term transformation."
"Going forward, Sears will be more focused on our Shop Your Way
membership platform, a network with tens of millions of active
members, and our Integrated Retail strategy in order to be a more
nimble, innovative and relevant retailer that is better able to
provide value and convenience to our customers. We are confident
that concentrating on these key initiatives will lay the foundation
for growth over the long-term," Mr. Lampert continued.
STORE CLOSURES
Over the last two weeks we have announced the closing of
non-profitable stores, comprising 109 Kmart and 41 Sears stores.
The list of store locations impacted can be viewed at
http://searsholdings.com/docs/010417_store_closing_list.pdf. While
these stores collectively generated about $1.2 billion in sales over the past 12 months,
they generated an Adjusted EBITDA loss of approximately
$60 million over that same period. We
expect to generate a significant amount of cash from the
liquidation of the inventory and related assets of these stores.
"The decision to close stores is a difficult but necessary step as
we take actions to strengthen the Company's operations and fund its
transformation. Many of these stores have struggled with their
financial performance for years and we have kept them open to
maintain local jobs and in the hopes that they would turn around.
But in order to meet our objective of returning to profitability,
we have to make tough decisions and will continue to do so, which
will give our better performing stores a chance at success," Mr.
Lampert said.
CRAFTSMAN TRANSACTION
The company has entered into an agreement to sell its Craftsman
business for $525 million at closing,
$250 million in three years, together
with use of a perpetual license for the Craftsman brand, royalty
free for 15 years, and a 15-year royalty stream on all third-party
Craftsman sales to new customers that could yield several hundred
million dollars more over time.
"We are pleased to announce our agreement to restructure the
ownership of our Craftsman brand, which will allow us to both
realize value and participate in the expansion of its distribution
and service offerings," Mr. Lampert said.
INCREASED LIQUIDITY
As announced on December 29, 2016,
Sears Holdings has obtained a secured standby letter of credit
facility from certain affiliates of ESL Investments, Inc., issued
by Citibank, N.A., of up to $500
million. In addition, we have entered a $500 million real estate backed loan, secured by
real estate properties valued at over $800
million, against which an initial draw of approximately
$320 million has been made. These
actions will provide additional liquidity and flexibility as we
work to close the asset sales previously referenced.
Further, our Board of Directors has established a Special
Committee to market certain real estate properties with the goal of
raising over $1 billion. We have
already identified diverse transaction opportunities to further
unlock value and increase liquidity and expect the Special
Committee will engage external advisors to help us market these
properties over the next several months. We have executed
several different forms of real estate monetization in the past and
expect these structures could be among the options evaluated by the
Special Committee in connection with this initiative.
Q4 BUSINESS UPDATE
Sales have continued to be challenging during the quarter to
date. Same store sales at Sears and Kmart for the first two months
of Q4 have declined in the range of 12-13%. We have continued to
manage inventory and costs closely and our current quarter to date
Adjusted EBITDA performance is largely in line with last year,
despite the sales declines.
Our Home Services business continues to improve and we believe
it is positioned to be a pillar of growth going forward. We are
continuing to explore ways to maximize the value of our Home
Services and Sears Auto Centers businesses as well as our Kenmore
and Die Hard brands through partnerships or other means of
externalization.
Forward-Looking Statements
This press release contains forward-looking statements intended to
qualify for the safe harbor from liability established by the
Private Securities Litigation Reform Act of 1995, including, but
not limited to, statements about our transformation through our
integrated retail strategy, our plans to redeploy and reconfigure
our assets, our liquidity, and our ability to exercise financial
flexibility as we meet our obligations. Whenever used, words such
as "will," "expect," and other terms of similar meaning are
intended to identify such forward-looking statements.
Forward-looking statements, including these, are based on the
current beliefs and expectations of our management and are subject
to significant risks, assumptions and uncertainties, many of which
are beyond the Company's control, that may cause our actual
results, performance or achievements to be materially different
from any future results, performance or achievements expressed or
implied by these forward-looking statements. Detailed descriptions
of risks, uncertainties and factors relating to Sears Holdings are
discussed in our most recent Annual Report on Form 10-K and other
filings with the Securities and Exchange Commission. While we
believe that our forecasts and assumptions are reasonable, we
caution that actual results may differ materially. We intend the
forward-looking statements to speak only as of the time made and do
not undertake to update or revise them as more information becomes
available, except as required by law.
About Sears Holdings Corporation
Sears Holdings
Corporation (NASDAQ: SHLD) is a leading integrated retailer focused
on seamlessly connecting the digital and physical shopping
experiences to serve our members – wherever, whenever and however
they want to shop. Sears Holdings is home to Shop Your
Way®, a social shopping platform offering members
rewards for shopping at Sears and Kmart as well as with other
retail partners across categories important to them. The company
operates through its subsidiaries, including Sears, Roebuck
and Co. and Kmart Corporation, with full-line and specialty retail
stores across the United States.
For more information, visit www.searsholdings.com.
NEWS MEDIA CONTACT:
Sears Holdings Public Relations
(847) 286-8371
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SOURCE Sears Holdings Corporation