Without the one-time gain, Sears would have lost between $305 million and $355 million in its second quarter, on an operational basis. The company saw its comparable store sales (comps) drop by 10.6% for the period.
Sears, however, said it expects to report a profit in the second quarter – its first in three years – as the company benefits from the sale and lease back of 235 Sears and Kmart stores to a real estate investment trust called Seritage Growth Properties it set up recently.
“Sears and its stockholders would receive a severely inadequate cash payment that the defendant Lampert-controlled company may use to cover operating losses and debt obligations for another year or so, before stockholders are left holding the bag in an insolvency widely viewed as inevitable if the proposed transaction occurs”. This trend has led to a nosedive in Sears stock.
The company expected is total cash and revolver availability to be around $3 billion by the end of the second quarter.
Sears announced that it expects a loss prior to interest, taxes amortization and depreciation of between $189 million and $249 million, which would be an improvement for the fourth straight quarter on adjusted earnings.
Sears Holdings says a key gross sales determine fell sharply within the second quarter, notably dragged down by weak spot at its namesake shops.
The sharp decline comes amid the company’s efforts to shrink operations, close stores and exit underperforming categories.
Sears Holdings Corp. officials have reported that the company’s total sales fell 13.9 percent at Sears locations and 6.9 percent at Kmart venues, Bloomberg reports.
Meek demand for consumer electronics at its store has been ascribed to the drop, which has followed suit with the 11% decline in the previous quarter. Spinning off its assets to the REIT for $2.7 billion, has been one of the CEO’s tactics to reverse the decline in profits.
On the financial front, Sears has amended and extended its $3.275 billion domestic credit facility, and it now has about $2 billion maturing in 2020 and the remainder in place until April 2016.
