Sears says it has a deal with the federal pension insurance agency to release 140 properties from certain restrictions in exchange for $407 million in pension contributions, some relief for once-storied department store chain.
The Hoffman Estates, Illinois retailer, which operates Sears and Kmart stores, says it expects net losses for the third quarter to improve by $190 million and that it hit its $1.25 billion target in cost savings for 2017. The company continues to close underperforming stores and sell assets in an attempt to remain afloat.
Sears expects about $3.7 billion in revenue for the third quarter, down from $5 billion a year ago, mostly due to store closures. It lost more than $2 billion in 2016.
The deal with the pension fund is expected to close in three months. After the $407 million contribution is made, Sears said it will be freed from pension obligations for two years, with the exception of a $20 million payment in the second quarter of 2018.
The company known for DieHard batteries and Kenmore appliances has been selling assets, most recently its Craftsman tool brand. Sears has said it's been hamstrung by the pension obligations, which prevented the company from selling off even more assets to fund operations.
Sears said its revenues were also dinged by reductions in the number of pharmacies in its Kmart stores, as well as cuts to consumer electronics offerings in Kmart and Sears stores.
Total sales in existing stores — a key metric of a retailer's health — declined more than 15 percent for the quarter, with Kmart comparable-store sales falling 13 percent from last year's quarter. Sears comparable-store sales declined 17 percent for the same period in 2016.
In addition to previously announced store closings, Sears said earlier this month it would close 63 additional namesake and Kmart stores after the holidays.
Shares in Sears fell almost 5 percent in afternoon trading, to $4.76, an all-time low, and have declined about 60 percent in the past year.