Sears Holdings (SHLD) Q1 Revenue Misses Estimates; Stock Slips

Sears Holdings (SHLD) Q1 Revenue Misses Estimates; Stock Slips

The shares of Sears Holdings declined after reporting its financial performance for the first quarter. The company posted quarterly losses that were smaller-than-expected, but its revenue missed consensus estimate.

The stock price of the company dropped more than 4% to $39 per share around 3:49 in the afternoon in New York.

Sears financial results

Sears Holdings reported that $303 million or $2.85 per share net loss attributable to shareholders in the firtst quarter. The figure was smaller than its net loss of $404 million or $3.79 per share recorded in the same prioe last year. The company said it achieved $2.00 in earnings per share excluding items.

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Sears Holdings said its revenue declined 25.3% to $5.88 billion during the quarter. Its comparable store sales in the United States dropped 10.9%. The comparable store sales of Kmart and Sears Domestic declined 7% and 14.5%.

Wall Street analysts expected Sears Holdings to record losses of $2.59 per shere on $6.08 billion in revenue in the first quarter based on data compiled by Thompson Reuters.

According to Sears Holdings, it has the financial flexibility to meet its obligation and finance its transformation efforts. The company has approximately $726 million in availability under its credit facility as of May 2, 2015. It has also $286 million in cash prior to the impact of its announced REIT transaction.

Sears Holdings said its pro forma cash on hand would be $2.3 billion and the availability under its credit facility would be $1.1billion assuming a successful completion of its REIT transaction.

In a statement, Edward Lampert, Chairman and CEO of Sears Holdings said, “With the completion of the joint venture transactions with three leading shopping mall owners and operators, and the advanced formation of the Seritage REIT, we will become more productive with our physical store space.”

Lampert added,” This will position Sears Holdings for long-term success consistent with our focus on our best stores, rewarding our best members and pursuing our best categories to transform Sears Holdings into a leading integrated retail membership-focused company leveraging our Shop Your Way platform.”

Sears Holdings targets REIT offering on Friday

Sears Holdings expected the Securities and Exchange Commission (SEC) to declare the company effective this week. The company aims to lauch its REIT offering on Friday, June 12.

Sears Holdings’ REIT transaction includes the sale and leaseback of approximately 235 Sears and Kmart store and the purchase of its interest in joint venutures. The company expects to generate $2.6 billion proceeds from the transaction.  According to the company, the proceeds from the offering combined with its previous joint venture transactions would be more than $3 billion.

Sears Holdings CFO Rob Schriesheim said, “Should both the REIT transaction and the amendment and extension of our ABL facility be successful, we will have enhanced our financial flexibility, recapitalized our balance sheet and secured a solid financial foundation to accelerate the investment in our transformation.”

“We expect to utilize a portion of the proceeds from the REIT transaction to pay down our existing revolver borrowings,” added Schriesheim.

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