In its 3rd quarter revenues announced today, Sears Holdings Corp. (NASDAQ: SHLD)reported that it has worked out a deal with the federal government that will free up the possible sale of additional shops with a home worth of more than $400 million.
Earlier this month, the United States Pension Advantage Warranty Corp. and Sears reached a new agreement that requires Sears to pay $500 million into 2 pension plans, consisting of contributions currently made by Sears since August 2017. The pension cover about 100,000 individuals.
The brand-new contract changes a March 2016 contract between PBGC and Sears that restricted Sears from offering 138 stores in its portfolio.
The new deal is anticipated to close in February 2018, after which Sears would be complimentary to monetize the homes.
Sears said it expects to raise $407 million through a sale of properties and funding protected by the properties, with any financing to be repaid from the sale earnings. The outlet store chain did not recognize the homes on the call.
“The just recently revealed agreement with the Pension Advantage Guaranty Corp. needs an initial in advance payment to the pension plans which will be secured by 138 properties launched to the company,” stated Rob Riecker, CFO of Sears Holdings. “As soon as complete, the estimated contributions of $550 million to the pension plans in 2018 and 2019 is removed (with the exception of a $20 million payment in July of 2018).”
“In addition we will be taking action in the near term with respect to specific upcoming debt maturities to offer the company with more monetary flexibility and improved liquidity,” Riecker added.
Sears reported a bottom line for the quarter of $558 million compared with a net loss of $748 million for the third quarter of 2016, an improvement of $190 million.
Total comparable store sales decreased 15.3% during the quarter. Kmart equivalent store sales reduced 13%, while Sears equivalent store sales decreased 17%.
It generated overall profits of $3.7 billion during the quarter compared to revenues of $5 billion in the previous year quarter, with store closures adding to over half of the decrease.
Earnings were also negatively affected by decreases in the number of pharmacies in open Kmart shops, in addition to the decrease in customer electronic devices assortments in both its Kmart and Sears stores.
Up until now in 2017, Sears has actually closed 330 shops and revealed it anticipates to close another 100 by the end of the 4th quarter.