Sears raises $100 million in new funding, sees smaller fourth quarter loss
Sears Holding Corp forecast a smaller fourth-quarter loss and said it received $100 million in new funding as it tries to shore up cash to stay afloat after years of losses.
The company, which at one time was the largest U.S. retailer, has been saddled with $3.3 billion in debt and is trying to boost liquidity after warning last March that it had doubts it could continue as a going concern.
The cash injection and the forecast sent the company`s shares up 3.5 percent on Wednesday as investors ignored a steep slump in sales during the holiday season.
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Sears, led by billionaire Eddie Lampert, also said it was in talks with lenders to reduce interest expense and extend maturities on more than $1 billion of its debt.
The retailer said it expects additional savings of $200 million, unrelated to store closures.
Sears has been aggressively shuttering stores and cutting jobs in a bid to return to profitability in 2018 after six years of losses.
"While the company has managed to stay afloat by selling and spinning off its real estate assets to generate cash, the chance of a turnaround seems bleak," Morningstar analyst Steve Jellinek said.
Last week, Sears said it would close another 103 unprofitable Kmart and Sears stores, in addition to the 63 it plans to close this month.
For the fourth quarter, the company expects net loss of $200 million to $320 million, excluding charges from closing stores, severance and tax-related matters.
Sears reported net loss of $607 million for the same period a year earlier.
The $100 million funding deal is backed by land leases and select intellectual property. The company added that it would be entitled to raise a further $200 million under certain conditions.
The retailer also said same-store sales at Sears and K-Mart stores in November and December had fallen between 16 percent and 17 percent.
Shares of the company, whose going-concern warning was symbolic of the troubles of America`s biggest traditional retailers, have tumbled over 60 percent in 2017.
(This article has not been edited by Zeebiz editorial team and is auto-generated from an agency feed.)