(Reuters) - Sears Holdings Corp SHLD.O, the one-time American retail giant, said on Thursday it plans to shutter another 72 locations to stem losses in the face of deepening financial distress and reported a nearly 12 percent drop in quarterly comparable-store sales.
The department store operator has been trying to transform its business as foot traffic at brick-and-mortar stores declines and online shopping gains popularity. Its chief executive, billionaire Eddie Lampert, has said the company should sell its well-known appliance brand Kenmore, home improvement businesses and real estate, and that his hedge fund ESL Investments Inc would bid for them.
Such a deal would infuse the debt-laden company, which also runs Kmart discount stores, with at least $500 million cash, helping it remain in business. The company last year said there were doubts about its ability to continue as a going concern.
To stem losses, Sears has closed nearly 400 stores since last year, leaving 894 stores still open as of May 5.
“While we had a challenging first quarter, we remain focused on improving our financial performance and enhancing our liquidity,” Lampert said in a prepared statement.
Sears shares, which have lost nearly all of their value in the last five years, were down almost 10 percent at $2.90 in mid-day trading. Lampert and his hedge fund own nearly half of the shares.
Earlier in May, Sears formed a special committee to explore the sale of Kenmore and divisions of its home services business, the same assets Lampert said he was interested in buying.
Sears has tried to sell those brands and businesses before. Last year, it sold its Craftsman tools brand to Stanley Black & Decker Inc (SWK.N) for $900 million.
The net loss attributable to the company was $424 million, or $3.93 per share, in its fiscal first quarter, ended May 5, compared with a profit of $245 million, or $2.29 per share, a year earlier. The results from the year-ago quarter included a $492 million benefit related to the sale of Craftsman.
Revenue fell 31.2 percent to $2.89 billion in the reported quarter, partly because of store closures.
“Continued efforts to enhance liquidity will be necessary to fund its ongoing operating losses,” said Moody’s Vice President Christina Boni.
Reporting by Jessica DiNapoli in New York and Uday Sampath in Bengaluru; Editing by Shounak Dasgupta and Steve Orlofsky