The company is putting proceeds from selling some of its stores and selling the Craftsman tool brand toward paying down debt and toward its employee pension obligations, which is fiscally responsible but doesn't do much for making its department and discount stores more appealing places to shop.
U.S. retail giant Sears Holdings Corp is to cut around US$1bn in costs across its operations in the next phase of its transformation plan that will see new efforts to drive efficiencies in pricing, sourcing and the supply chain. In order to help drive profitability, Sears said it intends to consider potential in-store partnerships, sub-divisions, and reformatting, while also evaluating "strategic options" for its Kenmore and DieHard brands and its Sears Home Services and Sears Auto Centers business through partnerships, joint ventures or "other means". In preliminary results, the chain said same-store sales fell 10.3%, with decrease of 8.0% at Kmart and of 12.3% at Sears Domestic.
For the fourth quarter, revenue plunged 16% to $6.1 billion and net losses widened by up to $635 million from $580 million in the period past year, the company said, citing preliminary results.
Still, shares remain well below their 52-week high of $19, and Sears, once the largest US retailer, still has a stock market value of only about $750 million, on par with much smaller retailers like Barnes & Noble and Tailored Brands.
Plans include at least $1B of annualized cost savings by reducing corporate overhead, more closely integrating Sears and Kmart operations, and improving merchandising, supply chain, and inventory management.
Sears Chairman and CEO Edward Lampert noted these actions are expected to reduce its overall cash funding requirements.
Last month, credit ratings agency Fitch estimated the company would burn through $1.8 billion in the fiscal year that just started an even bigger cash drain than 2016, sending shares to an all-time low.