HOFFMAN ESTATES, Ill. — Sagging sales and declining profits plagued Sears Holdings during the fourth quarter as the company posted a $2.4 billion loss and announced several measures to bolster its balance sheet.
Total company sales during the fourth quarter declined by $518 million to $12.5 billion as same-store sales at Sears domestic stores dropped 4.1%, while Kmart had a comps decline of 2.7%. Comps at Sears Canada stores declined 7.5%. Full-year sales declined by $1.1 billion to $41.6 billion as the company operated fewer stores and experienced same store sales declines throughout the year.
The effect was a massive hit to profitability as the company reported a $2.4 billion loss for the quarter and a $3.1 billion loss for the full year. Despite the drop in profitability, Sears sought to reassure investors that the company has taken appropriate actions to maintain and enhance liquidity. For example, the company highlighted the fact that fourth-quarter operating profits totaled $351 million and it had roughly $3.2 billion in liquidity between a cash balance of $754 million and an untapped credit line of $2.5 billion. In addition, the company said it had reduced inventories by $544 million, reduced expenses by nearly $200 million and would generate revenues of $270 million by selling 11 stores and between $400 and $500 million by separating its Sears Hometown and outlet businesses.
“We are taking immediate actions to address our fourth quarter performance including cost and inventory reductions, honed and targeted marketing, margin actions, and bringing in new talent to strengthen our merchandising and leadership team, like Ron Boire, who was recently named chief merchant and president, Sears and Kmart Formats,” said Lou D’ Ambrosio, Sears Holdings president and CEO. “It's also important to distinguish between our earnings issue and the strength of our balance sheet, where we have significant assets and liquidity. We are further strengthening the balance sheet by approximately $1 billion through the actions we are announcing today regarding Hometown, Outlet, and Hardware stores, a real estate transaction, and inventory reductions.”
The company also intimated that it was willing to undertake further real estate transactions to generate revenue.
“We have a substantial unencumbered real estate portfolio, well-established stand-alone businesses, including Land