Sears Cuts 400 Jobs in Turnaround Plan -- Update
June 13 2017 - 11:58AM
Dow Jones News
By Imani Moise
Sears Holdings Corp. on Tuesday said it is cutting 400 jobs at
its corporate offices as part of its restructuring plan.
The struggling retailer said the bulk of job cuts will be at its
Hoffman Estates, Ill., headquarters, adding that 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 $1.25 billion
restructuring plan the company unveiled earlier this year. Sears
Holdings said that 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 owner of Kmart and Sears stores raised doubts in March that
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's expectations for the business's near-term health.
Separate on Tuesday, Sears Canada Inc., which was partially spun
off from Sears Holdings, for the first time cast doubt on its own
ability to continue operating 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.
Financial adviser BMO Capital Markets and lawyers at Osler
Hoskin & Harcourt LLP will advise Sears Canada on its options,
which the company said could include a financial restructuring or a
sale.
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 Holdings 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 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 its 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 was down 3% to $6.82 in recent trading.
Sears Canada stock was trading at about 60 cents and has lost
nearly three-quarters of its value so far this year on the Toronto
Stock Exchange.
Andrew Scurria contributed to this article
Write to Imani Moise at imani.moise@wsj.com
(END) Dow Jones Newswires
June 13, 2017 11:43 ET (15:43 GMT)
Copyright (c) 2017 Dow Jones & Company, Inc.
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