Published: Sat, February 11, 2017
Economy | By Melissa Porter

Sears maps out survival strategy, sending stock soaring

In January, Sears announced plans to shutter 150 loss-making stores, two days after netting a $500m lifeline to stay afloat. Sears also is reworking its debt load again, and many analysts are concerned that the retailer needs $2 billion a year to fund operations and is running out of things to sell or put up as collateral.

Beleaguered retailer Sears Holdings Corp said on Friday it would cut costs by $1 billion and reduce debt and pension obligations by at least $1.5 billion this year, sending its shares soaring as much as 40 percent.The company also said it had sold five Sears full-line stores and two Auto Centers for $72.5 million in January, and had engaged Eastdil Secured to raise at least $1 billion from the sale of its real estate.Once the largest USA retailer, Sears has struggled with years of losses and declining sales as shoppers shift online or to rivals such as Wal-Mart Stores Inc.

"Today we are initiating a fundamental restructuring of our operations", said billionaire CEO Eddie Lampert in prepared remarks.

The move is the latest by Sears to try to fix what many view as a dying franchise. The company announced previous year it would close a large number of its stores. And the company has been plagued by worries about vendors and lenders cutting off supplies and cash.

Consolidating similar parts of the Sears and Kmart businesses should be the entire point of a merger like the one that brought Sears and Kmart together over a decade ago, so is there anything to this plan that hasn't been part of the company's unsuccessful "path to profitability" to date?

And it recently created a separate public company for some of its real estate assets - Seritage Growth Properties.

Shares of troubled retailer Sears Holdings Corp (NASDAQ: SHLD) soared by almost 50 percent Friday morning after the company issued details on its next phase of strategic transformation. That's better than the drop of 13.1 percent that Wall Street had expected, according to FactSet. Still, Sears may have more breathing room.

Shares of Sears were trading around $7.25 Friday morning.

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