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Sears to close more stores on heels of terrible quarter

Sears Holdings Corp. did not come out of the gate running in its first quarter.

The struggling retailer on Thursday reported a 31% drop in revenue, and said it has identified 100 non-profitable locations, many of which will begin store closing sales “in the near future.” (Sears operated a total of 894 stores at the end of the first quarter, which is 381 less than it did one year ago.). It posted a list of 15 Kmart stores and 48 Sears stores (to see list, click here) that will close in early September, with liquidation sales set to begin as early as June 14. Sears said the list will be updated.

“We continue to evaluate our network of stores, which are a critical component in our transformation, and will make further adjustments as needed and as warranted,” the retailer stated.

Sears swung to a loss of $424 million, or $3.93 loss per share, in the quarter ended May 5, compared to a profit of $245 million, or $2.29 a share, in the year-ago period. (The prior-year quarter's results got a $741 million lift from asset sales. In the latest quarter, Sears recorded a $165 million benefit.)

The company’s total revenue, which includes appliance and product-repair services, fell 31% to $2.89 billion. Total merchandise sales fell 34% to $2.2 billion.

Total same-store sales fell 11.9%, with a 13.4% decline at Sears fell 13.4%, a 9.5% drop at Kmart.

Sears has been working to leverage its assets—and not just its real estate. In April, ESL Investments, the hedge fund controlled by Sears chairman and CEO Eddie Lampert, proposed to buy certain assets of the chain, including its signature Kenmore brand.

An independent committee of the retailer is currently evaluating the deal.

“As we look to the remainder of 2018 and beyond, we remain committed to restoring positive Adjusted EBITDA and will continue to explore opportunities to unlock the full potential of our assets for our shareholders,” Lampert stated. “This includes exploring third-party partnerships involving several of our businesses - such as Sears Home Services, Innovel, Kenmore and DieHard - and gaining further momentum around our new smaller store formats that blend brick and mortar and online experiences. We believe these initiatives, among others, will help us to strengthen the company and better position it for the future."

Sears ended the quarter with $466 million in its cash reserves, compared with $336 million in the prior period.
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