As part of ongoing efforts to streamline the company’s operations and focus on our Best Stores, Sears has identified approximately 100 non-profitable stores, 72 of which will begin store closing sales in the near future.
“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,” Sears said in a statement.
Separately, as previously announced on May 14, 2018, a special committee of the board of directors of the company (the “Special Committee”) has initiated a formal process to explore the sale of the Kenmore brand and related assets, the Sears Home Improvement Products business of the Sears Home Services division and the PartsDirect business of the Sears Home Services division (collectively, the “Sale Assets”).
The Special Committee, which consists solely of independent directors, continues to evaluate the letter, dated April 20, 2018, from ESL Investments, Inc. expressing interest in participating as a purchaser of all or a portion of the Sale Assets.
The company reported a net loss attributable to Holdings’ shareholders of US $424 million (US $3.93 loss per diluted share) for the first quarter of 2018. This compares to net income attributable to Holdings’ shareholders of US $245 million (US $2.29 earnings per diluted share) reported for the first quarter of 2017, which included a gain of US $492 million recognized in conjunction with the sale of the Craftsman brand. Adjusted EBITDA was US $225 million in the first quarter of 2018, as compared to US $220 million in the prior year first quarter.
The company generated total revenues of approximately US $2.9 billion during the first quarter of 2018, compared with revenues of US $4.2 billion in the prior year quarter, with store closures contributing to nearly two thirds of the decline. Total comparable store sales declined 11.9 percent during the quarter, comprised of a 9.5 percent decline at Kmart and a 13.4 percent decline at Sears. While total comparable store sales declined, the Company did experience positive comparable store sales at both Kmart and Sears in several categories, including apparel, footwear and jewelry.
Edward S. Lampert, Chairman and Chief Executive Officer of Holdings, said, “In a challenging quarter, we continued to focus on our strategic transformation, identifying additional opportunities to streamline operations and adjust inventory and operating expenses while staying focused on our Best Members, Best Categories and Best Stores. Our Shop Your Way membership program and Integrated Retail Strategy are our key priorities, and we continue to look for new ways to leverage our Shop Your Way ecosystem to drive improvements in value for our members and to increase the frequency and amount of their engagement.”
“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. 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.”
Rob Riecker, Chief Financial Officer of Holdings, said, “To support our transformation efforts, we continue to take important, proactive steps to address our capital structure, enhance our liquidity position and provide the Company with additional financial flexibility. We intend to take further action with respect to certain near-term maturities of our debt, including through repayments, refinancings and extensions of such debt.”