SEARS HOLDINGS OUTLINES NEXT PHASE OF ITS STRATEGIC TRANSFORMATION
Sears Holdings Corporation has announced that it has delivered meaningful improvement in operating performance for the fourth quarter of 2016, and outlined important actions to drive profitability. These include steps to enhance the company’s liquidity and financial flexibility, as well as a strategic restructuring program intended to streamline operations, further improve operating performance and target cost reductions of at least $1 billion on an annualized basis. These savings include cost reductions from the previously announced closure of 108 Kmart and 42 Sears stores.
Under the restructuring program, the company intends to: simplify its organizational structure, including greater consolidation of the Sears and Kmart corporate and support functions, as well as improve accountability for profitability at its store and online channels; implement an integrated model to drive efficiencies in pricing, sourcing, supply chain and inventory management; optimize product assortment at Sears and Kmart stores, using data analytics to better align with preferences of Best Members focusing on profitable, high-return Best Categories; and actively manage its real estate portfolio to identify additional opportunities for reconfiguration and reduction of capital obligations.
“We significantly improved our operating performance and made progress toward profitability in the fourth quarter of 2016,” said Edward S. Lampert, chairman and chief executive officer of Sears Holdings. “In the first several weeks of 2017, we undertook a series of transactions to optimize our capital structure and unlock value across our wide range of assets. We also reached an agreement to amend our asset-based credit facility which further enhances our liquidity and financial flexibility. Furthermore, we intend to use net proceeds from our announced Craftsman and real estate transactions, as well as from improvements in the operating performance of the company, to meaningfully reduce our outstanding obligations and their associated expenses.”
In addition to the cost reduction target, the company continues to assess its overall operating model and capital structure to become a more agile, asset-light and innovative retailer focused on member experience. To help drive its profitability, the company intends to: capitalize on valuable real estate through potential in-store partnerships, sub-divisions, and reformatting to support its Integrated Retail model; and continue to evaluate strategic options for its Kenmore and DieHard brands and its Sears Home Services and Sears Auto Centers business through partnerships, joint ventures or other means.
“We believe the actions outlined today will reduce our overall cash funding requirements and ensure that Sears Holdings becomes a more agile and competitive retailer with a clear path toward profitability. In addition, we believe these actions will enable us to focus our investments to drive our strategic transformation and the evolution of our Shop Your Way ecosystem through value enhancing partnerships, compelling offerings and a seamless online and in-store shopping experience for our members,” Lampert concluded.