Department-store chain Sears Holdings warned Wednesday that it will record a net loss in the fourth quarter after a rough holiday shopping season, as the company continues store closures and cost cuts.
Sears CEO Eddie Lampert said in a blog post that if the company can't refinance certain debt to get more financial breathing room, the company "will consider all other options to maximize the value of Sears Holdings’ assets."
The retailer wants to renegotiate $1 billion in debt by extending due dates and overhauling other terms.
That would allow the company to "unlock value in our other brands and major assets, including Kenmore, DieHard, Sears Home Services, Sears Auto Centers and our real estate portfolio," Lampert said.
The company last year sold its Craftsman brand for $900 million and announced closures of about 400 stores, including Kmart locations. Sears had around 1,000 locations remaining when the new year began.
Sears — which announced Jan. 4 that it would close more than 100 additional stores — said Wednesday that it would record a net loss of $200 million to $320 million for the fiscal fourth quarter.
The retailer is also pursuing new loans tied to its Nomember plan to sell up to 140 properties after reaching a deal with the U.S. government to fund pensions.
The company owes more than $1.4 billion in debt payments in 2018, according to market data analysis and research firm Debtwire.
"The reality is they’re still generating negative cash flow, so they have to find external funding," said Philip Emma, senior retail and credit analyst at Debtwire.
Bankruptcy is "not unrealistic" if the company can't renegotiate debt terms, he said.
The company already warned in early 2017 that there was "substantial doubt" about its long-term survival.
To be sure, there are some signs of improved finances. The company's fourth-quarter loss is better than the year-earlier period's $607 million loss. But it also shows that the retailer has not been able to stop the bleeding despite a series of aggressive cost-cutting measures.
One of the key moves announced Wednesday was another round of cost reductions. In addition to ongoing store closures, which totaled about 400 locations in 2017, the company will shed $200 million in costs this year.
CEO Lampert himself is the source of much of the company's financial backing. He has provided various loans to Sears as the company tries to dig out a retail crisis that has ensnared many iconic brands.
If he chooses to continue extending credit to Sears through his hedge fund, the company could yet live to fight another day.
"When implemented, the initiatives we are announcing today will represent an important forward step for Sears Holdings – one that will strengthen our financial position and sharpen our operating focus," Lampert, who rarely gives interviews, said in the blog post. "We will of course have a lot of work to do to prove we can deliver on our plans. But our leadership team is more aligned and committed to the transformation of our company than ever before."
The company said it had also raised $100 million in new financing and is aiming to land additional secured debt.
Sears stock rose 3% to $3.22 in morning trading. USA Today