NEW YORK (AP) — Sears said Thursday that it's unloading some of its profit-busting stores, but the retailer fell short of revealing how it plans to woo shoppers back into its remaining ones.
Investors have long speculated that the troubled retailer could sell off its massive real estate holdings to generate extra cash. But industry watchers say that will do little to solve Sears' main problem: Rivals have been able to lure customers away from the chain because of its drab stores and unexciting merchandise.
"The image is atrocious. The stores are old and they're run down. They don't look like a nice place to visit," said Ron Friedman, a partner in the retail and consumer products industry group of accounting firm Marcum, LLP in New York. "I don't think that the Sears we see today can be around from a year today. It has to change."
As part of a plan to turnaround the company, Sears Holdings Corp., based in Hoffman Estates, Ill., said on Thursday that it will spin off of its smaller Hometown and Outlet stores as well as some hardware stores in a deal expected to raise $400 million to $500 million.
In a separate deal, Sears will sell 11 stores to the real estate company General Growth Properties for $270 million. The company, led by billionaire investor Edward Lampert, also said it plans to cut inventory by $580 million.
The plans follow news in December that the company would close at least 100 to 120 stores to raise cash after a disastrous holiday season in which revenue at stores open at least a year — an indicator of a retailer's health — fell 5.2 percent in the eight weeks ended on Dec. 25.
"We're executing actions to unlock the value of our portfolio and assets," said CEO Lou D'Ambrosio in a call with analysts.
Shares soared as much as 20 percent Thursday on the news, despite that the company also reported a $2.4 billion loss for the fourth quarter that was much worse than what Wall Street analysts had expected.
The climb extended a rally the retailer has enjoyed since January as its assured suppliers and investors that it can honor its financial agreements.
Shares are up nearly 95 percent since the beginning of the year. They were up $9.72 to $61.80 on Thursday.
Industry watchers weren't as impressed as Wall Street. They said that Sears' biggest problem is that the company hasn't invested in its stores.
Continue reading this story on the...