In a move to strengthen earnings amid weak sales while also boosting shareholder holder value, Sears Holdings Corp. said Monday it tendered $935.6 million of its senior secured notes — due in 2018 — as part of a previously announced $1 billion offer.
The early tender date was at the close of business on Friday. Sears announced the offer earlier this month, which included an update of its earnings outlook.
The tender offer follows other tactics to prop up the company’s finances — notably deals aimed at monetizing its real estate holdings — as the retailer gears up to report quarterly earnings on Thursday.
Investors seemed indifferent to the early tender date as well as the amount brought in, which was just shy of the entire offer. Shares of the company closed the day up 0.6 percent to $25.33. The 52-week low is $19.08, and the high is $48.25.
“Pursuant to the terms of the offer, holders of notes may tender additional notes at or prior to 11:59 p.m., New York City time, on August 28, 2015, unless the offer is earlier terminated or extended by the company in its sole discretion,” the company said in its statement Monday morning adding that Jefferies LLC is serving as “dealer manager” for the offer.
In the Aug. 3 earnings update, Sears said same-store sales were down 10.6 percent with the domestic Sears brand declining 13.9 percent and Kmart decreasing 6.9 percent. The retailer said excluding electronics total comparable-store sales showed a 9.1 percent decline. The company is in the midst of a repositioning effort for that segment of its business.
Target Corp. is also rethinking its electronics business, which included changes in its merchandising team last week. Over the past few years, broad-line retailers such as Kmart and Target have either abandoned the electronics category or refocused it with a smaller number of stockkeeping units.
Sears domestic has a larger selection of consumer electronics as well as major appliances. The high-price point, lower-margin electronics business requires heavy inventories and knowledgeable sales associates. Instead of competing against Best Buy and Wal-Mart in the category, companies are shifting away from electronics and toward other segments such as activewear, accessories and personal-care products.
Regarding Sears’ real estates deals, the company is expected to reveal gains totaling $1.4 billion with about $510 million posted when the company releases second-quarter results on Thursday. Currently, the company operates 979 Kmart stores and 717 Sears units.