HOFFMAN ESTATES, IL-Sears Holdings Corp. executives are going through intense damage control today as the company released its fourth quarter earnings showing a $2.4 billion loss for the fourth quarter 2010. In separate statements, the company said it is selling 11 stores to General Growth Properties for $270 million, and is spinning off its hometown, outlet and some of its hardware businesses for up to $500 million.
Investors seem to be happy with the moves, as Sears Holdings stock jumped about 20% by mid-day. The stock jumped more than $10 per share, and is up at more than $60 per share, a height not seen since the company announced in late December that it plans to shut more than 120 stores nationwide. The company has more than 4,000 stores in the United States and Canada.
The company reported comp store sales declined 3.4%, as other competing retailers have announced increases in their Q4 results. In a statement early today, CEO and president Lou D’Ambrosio said the company is taking immediate action, including about $1 billion in cuts and property sales, to address the performance issues, “including cost and inventory reductions, honed and target marketing, margin actions and bringing in new talent to strengthen our merchandising and leadership team.” The company hired former Brookstone CEO Ron Boire as chief merchandising officer in January.
The 11 Sears stores are all at GGP malls, and the Chicago-based REIT said in a statement that it’s happy to buy the sites. The company announced in its latest Q4 report that it will concentrate this year on buying and leasing up big box stores in its portfolio areas. Shobi Khan, COO of GGP, said in a statement this morning that the Sears acquisitions are in line with the company expansion and redevelopment plan. “Over the next several years we anticipate adding 319,000 square feet of new inline space, the majority at Ala Moana Center, our most productive mall,” he said.
The 11 closing stores include Sears locations at Ala Moana in Honolulu; Apache Mall in Rochester, MN; Bellis Fair in Bellingham, WA; Fashion Place in Murray, UT; Mall of the Bluffs in Council Bluffs, IA; Market Place Shopping Center in Champaign, IL; Provo Towne Centre in Provo, UT; Quail Springs Mall in Oklahoma City, OK; West Oaks Mall in Ococee, FL; and the Woodlands Mall in Woodlands, TX. The stores will operate until sometime after Jan. 1, 2013.
Sears intends to separate its Sears Hometown and Outlet businesses, and certain hardware stores, through a proposed rights offering that is expected to raise up to $500 million. The rights will entitle holders to purchase shares in the combined businesses, and will be transferred to hodlers of Sears Holdings common stock. The offering will take place in the second quarter. Details of the offering are not yet available, said the company in a statement.
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