Sears Cuts 400 Jobs in Turnaround Plan
June 13 2017 - 10:49AM
Dow Jones News
By Imani Moise
Sears Holdings Corp. said it is cutting 400 jobs at its
corporate offices as part of its restructuring plan.
The struggling retailer said Tuesday the bulk of job cuts will
be at its Hoffman Estates, Ill., headquarters, adding it worked to
leave open positions unfilled and reduce contract workers before
cutting full-time jobs.
The planned job cuts are in addition to the company's $1.25
billion restructuring plan it unveiled earlier this year. Sears
Holdings said so far, actions such as paying down debt, cutting
expenses and reducing the size of its pension plan have created $1
billion in annualized cost savings.
The Kmart and Sears owner raised doubts in March it could
generate enough money to cover its obligations over the next 12
months. The company said the disclosure was triggered by an
accounting rule that recently took effect and didn't reflect
management expectations for the business's near-term health.
In a separate announcement Tuesday, Sears Canada Inc., which was
partially spun off from Sears Holdings, also cast doubt on its
ability to continue operating for the first time after struggling
to cobble together necessary financing.
The Canadian retailer, which has been operating at a loss since
2014, said it had expected to borrow up to $175 million against its
real estate, but negotiations with lenders revealed it could only
raise up to $109 million. Without an additional cash infusion the
company warned it might not generate enough money from operations
to meet its obligations coming due within the next year.
Sears Holdings has been selling large chunks of its real estate
and brands to stay alive, but the lack of lenders willing to
provide liquidity is a sign that shedding assets to fund losses has
its limits.
At the end of April, Sears had $70 million left to borrow on its
credit line. The company used $1 billion of the $1.5 billion of the
revolving credit facility, but total borrowings under the loan are
restricted based on certain financial measures as well as its
inventory and receivables balances.
The company said Tuesday it pushed back payments on $400 million
in debt due soon and paid down about $418 million of debt. It also
announced Stephan Zoll, president of Sears Holdings' online unit,
is leaving his position.
Sears Holdings Chief Executive Edward Lampert owns about 45% of
Sears Canada, in part through his hedge fund, ESL Investments Inc.
Sears holds an additional 12% stake in the company.
Sears Holdings stock is down 4.1% to $6.74 in recent
trading.
Sears Canada stock is trading at 55 cents, and has lost nearly
three-quarters of its value so far this year on the Toronto Stock
Exchange.
Write to Imani Moise at imani.moise@wsj.com
(END) Dow Jones Newswires
June 13, 2017 10:34 ET (14:34 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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