Sears offered another rather depressing earnings report but says recent restructuring of the U.S. tax code will help it post a profit in the not-too-distant future. The store confirmed that same-store sales were down a whopping 15.6 percent during the fourth quarter of fiscal 2017.
Sears’ namesake brick-and-mortar brand led the declines, with same-store sales down 18.1 percent during the holiday shopping season. Kmart did a bit “better,” with sales down 12.2 percent.
The news comes as Sears is commencing private exchange offers for its outstanding unsecured notes due in 2019 and its secured notes due in 2018, according to a filing with the Securities and Exchange Commission (SEC).
Sears said it’s looking for a revenue of $4.4 billion in the fourth quarter — compared with the $6.1 billion the retailer reported a year ago. Net income will be between $140 million and $240 million, the company said, with the new tax law giving the company a benefit of roughly $445 million to $495 million.
Sears lost $607 million during the same period in 2016.
To help turn things around, the company plans to shutter
103 additional stores in 2018. Sixty-four of them will be Kmart stores, and 39 are Sears-branded. The long-suffering brand has said that closing non-profitable stores in its fleet has “resulted in meaningful improvement” in Sears’ general performance. Going forward, the brand hopes to pursue a “less asset-intensive business model.”
It won’t be easy, however. JCPenney has all but announced its expansion into the appliance business, Walmart’s strength remains constant and even Target has managed to get a turnaround underway
Investors— perhaps shocked to hear Sears say the word “profit” — reacted favorably to the news, despite the drop in same-store sales, by bumping shares up more than 16 percent in Thursday (Feb. 15) trading.
Sears’ stock has tumbled more than 65 percent from a year ago, recently trading below $2, an all-time low for the company.