Sears Q4 loss narrows but sales down; REIT to raise $2 billion

Hoffman Estates, Ill. -- Sears Holdings Co. on Thursday reported its 11th consecutive quarterly loss, posting a loss of $159 million for the fourth quarter, down from loss of $358 in the year-ago period, amid cost reductions.



The struggling chain saw its losses for the full year widen to $1.7 billion from $1.4 billion, marking its fourth straight year of decline. Total long-term debt rose to $3.2 billion from $2.9 billion a year earlier.



Sears also announced that it is amending and extending a $400 million short-term loan that it took out in September from a hedge fund run by Sears chairman and CEO Lampert. The retailer said it will repay $200 million of the loan on Monday, with the remainder extended until June 1, or until the company receives proceeds from the potential REIT transaction. As reported earlier, Sears is looking to spin 200 to 300 of its stores into a REIT. The retailer said Thursday it expects proceeds of more than of $2 billion from those sales and expects to complete the process by June.



Sales for the quarter, ended Jan. 31, decreased to $8.1 billion from $10.6 billion. Same-store sales fell 4.4%, with the biggest drop off, 7%, at Sears stores. Kmart's same-store sales were down 2%.



Despite the sizable losses, Lampert sounded an optimistic note in the earnings release, reviewing the company’s performance in terms of its adjusted earnings before interest, taxes, depreciation and amortization, or adjusted EBITDA. He characterized the fourth quarter results as a significant improvement, with adjusted EBITDA of $125 million reversing a prior year loss of $68 million.



“While we clearly believe that we can improve upon these results, we are pleased with the positive trend that started in the third quarter, and we currently expect this level of improvement to carry forward into our full year 2015 results," said Lampert. "We believe that the changes we are making to focus on our best stores, reward our best members and pursue our best categories will help us continue to transform Sears Holdings into a leading integrated membership-focused company."



For the year, revenues were down to $31.2 billion from $36.2 billion. The company closed about 234 underperforming Kmart and Sears stores in 2014.