Sears Holdings (SHLD) Reports Q2 Loss of $4.68/Share, Continues to Explore Ways to Unlock Value

(Updated - September 13, 2018 4:47 PM EDT)

Sears Holdings (NASDAQ: SHLD) reported Q2 EPS of ($4.68), versus ($2.33) reported last year. Revenue for the quarter came in at $3.18 billion, versus $4.28 billion reported last year.

• Adjusted EBITDA was $(112) million in the second quarter of 2018, as compared to $(66) million in the prior year second quarter.

Strategic Actions

As previously announced on August 22, 2018, we identified 46 unprofitable stores which we expect to close during the fourth quarter of 2018, advancing the Company's ongoing efforts to streamline our operations, strengthen our capital position and focus on our Best Stores. We continue to evaluate our network of stores, which is a critical component to our integrated retail transformation, and will make further adjustments as needed.

As part of the Company's ongoing efforts to simplify its organization structure and in recognition of the fact that we are becoming a smaller company, we continue to evaluate all areas of our cost structure and intend to pursue additional measures to achieve cost savings, including greater consolidation of the Sears and Kmart corporate and support functions. We expect these initiatives to result in annualized cost savings of approximately $100 million. This is in addition to the Company's $200 million of annualized cost savings initiative announced earlier this year that we have exceeded. These incremental cost actions, along with the completion of the various financing and asset sale transactions are intended provide us with the path forward to transform the Company successfully, while continuing to focus on our key priorities - Shop Your Way and Integrated Retail, as well as on our Best Members, Best Categories and Best Stores.

As previously announced on May 14, 2018, a special committee of the board of directors (the "Board") of the Company (the "Special Committee") is overseeing a formal process to explore the sale of our Kenmore brand and related assets, the Sears Home Improvement Products business of the Sears Home Services division and the Parts Direct business of the Sears Home Services division (collectively, the "Sale Assets"). As previously reported, the Board received a letter from ESL Investments, Inc. ("ESL") expressing the view that the Company should pursue a divestiture of the Sale Assets in order to maximize their value, and expressing interest in participating as a purchaser of all or a portion of the Sale Assets should the Company do so. The Board established the Special Committee, which consists solely of independent directors, and is advised by independent advisors, to evaluate any proposals that may be received from ESL with respect to the Sale Assets, to actively solicit third-party interest in the Sale Assets, and to explore any other alternatives with respect to the Sale Assets that may maximize value for the Company. On August 14, 2018 the Special Committee received a non-binding proposal letter from ESL to acquire the Kenmore brand and related assets and the Sears Home Improvement Products business of the Sears Home Services division, each subject to various conditions including obtaining debt financing, and, in the case of Kenmore, obtaining equity financing on terms acceptable to ESL. The Special Committee is evaluating the proposal, and potentially other proposals as part of its formal process.

We also continue to explore ways to unlock value across a range of other assets and to maximize the value of our Sears Home Services, Innovel and Sears Auto Centers businesses, as well as our DieHard brand. Options we are exploring include partnerships, sales or other means of externalization that could expand distribution of our brands and service offerings.

For earnings history and earnings-related data on Sears Holdings (SHLD) click here.

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