Sears reports $2.4 billion Q4 loss, will spin off some stores

Hoffman Estates, Ill. -- Sears Holdings Corp. reported Thursday a loss of $2.4 billion in the fourth quarter, compared with a profit of $374 million in the year-ago period. And in a move long anticipated by some analysts, the chain also announced plans to tap into its massive real estate holdings to help make up for its faltering retail performance.

Revenue for the quarter slipped 4% to $12.5 billion, from $13 billion. Same-store sales fell 4.1% during the quarter at Sears and 2.7% at Kmart.

In a statement, CEO Lou D’Ambrosio said that the company was taking “immediate actions” to address the losses, including cost and inventory reductions, targeted marketing and hiring for its merchandising team.

The parent to Sears and Kmart disclosed that it plans to separate its smaller Sears Hometown and Outlet Businesses, as well as some hardware stores through a special rights offering that is expected to raise approximately $400 million to $500 million. Sears said the separation will provide additional liquidity to the company and enable it to focus on its core business.

In addition, Sears announced it will sell 11 full-line Sears stores to mall owner General Growth Properties for $270 million. The stores, which are part of GGP, will continue to operate as Sears locations into 2013, with final closing dates to be determined and announced later this year, according to Sears Holdings.

“We're executing actions to unlock the value of our portfolio and assets,” said Sears CEO Lou D'Ambrosio in a quarterly conference call with analysts. The call itself was unusual in that the chain hasn’t had one since billionaire Edward Lampert took over the company in 2005.

On the call, Sears executives stressed the company had ample liquidity and that restructuring moves would demonstrate the value of its assets.

The plans, which follow news in December that the company would close at least 100 stores to raise cash, are part of the retailer’s aggressive turnaround strategy, which has also included job cuts.

Sears said its quarterly performance was hurt by high costs for cotton and fuel, too-high inventory, and unseasonable weather that led to lower sales of winter gear. The company also cited low consumer demand for two of its biggest categories, appliances and consumer electronics.

For the year, net loss totaled $3.1 billion, compared with net income of $133 million.

Revenue fell 3% to $41.57 billion, from 442.66 billion a year ago.