Sears Holdings Corp. posted fourth-quarter results that were better than a year ago on an adjusted basis, but even though it also beat Wall Street’s estimates, the quarterly result was still a loss for the period.
On a GAAP basis, the net loss for the three months ended Jan. 28 was $607 million, or $5.67 a diluted share, compared with the net loss of $580 million, or $5.44, a year ago. The loss included a non-cash accounting charge of $381 million connected to the impairment of the Sears trade name.
On an adjusted basis, the loss was $137 million, or $1.28 a diluted share, versus a loss of $181 million, or $1.70, a year ago. Revenues in the quarter fell 17.1 percent to $6.05 billion from $7.30 billion.
Sears’ loss per share managed to best Wall Street, which was expecting a loss of $2.85 on revenues of $5.89 billion, by $1.57.
The company said it has completed the sale of its Craftsman brand to Stanley Black & Decker in a deal valued at $900 million. Upon closing, the company received an initial upfront cash payment of $525 million. Sears will receive another $250 million in three years, and payments on a percentage scale for new Stanley Black & Decker sales of Craftsman products for the next 15 years.
In securing the approval of the Pension Benefit Guaranty Corp. — Craftsman was a pledged asset — Sears agreed to give PBGC a lien on the 15-year Craftsman income stream, and to a lien of $250 million cash payable on the third anniversary of the closing of the Craftsman transaction. The cash payment would be credited to Sears’ pension funding obligations for the years 2017, 2018 and 2019. Further, Sears also agreed to give PBGC a lien on $100 million of real estate assets to secure its minimum pension funding obligations through 2019.
Edward S. Lampert, chairman and chief executive officer, said, “We delivered significant adjusted EBITDA improvement in the fourth quarter, reflecting our firm focus on profitability to offset ongoing revenue pressures. Building on this positive momentum, we are taking decisive actions to become a more agile and competitive retailer with a clear path toward profitability.”
Jason M. Hollar, chief financial officer, said, “While the challenging holiday selling season pressured margins and comparable store sales, we were able to successfully improve profitability through disciplined inventory and costs management.”
Sears attributed the decline in sales to having fewer Kmart and Sears full-line stores, which contributed $596 million of the revenue decline. Comparable-store sales declines also were a contributing factor, which accounted for $555 million of the revenue decline. Comps at Kmart fell 8 percent in the quarter, while Sears domestic comps were down 12.3 percent.
The retailer said its cash balances were $286 million at the end of the fourth quarter.