Sears 'will consider all other options' if refinancing fails, CEO Eddie Lampert warns

Nathan Bomey | USA TODAY

Show Caption Hide Caption Sears raises $100 mln in new funding Sears raised $100 million in new funding and forecast a smaller loss in the fourth quarter, sending its shares higher.

Even as other department stores reported sales gains, Sears Holdings warned Wednesday that it will record a net loss for the period that included the critical holiday season, raising new doubts about the chain's future.

Sears CEO Eddie Lampert sounded ominous in a blog post, writing that if the company can't refinance certain debt to get more financial breathing room, it "will consider all other options to maximize the value of Sears Holdings’ assets."

The retailer, which has both the Sears and Kmart chains, wants to renegotiate $1 billion in debt by extending due dates and overhauling other terms.

That would allow the company to "unlock value in our other brands and major assets, including Kenmore, DieHard, Sears Home Services, Sears Auto Centers and our real estate portfolio," Lampert said.

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The company last year sold its Craftsman brand for $900 million and announced closures of about 400 stores, including Kmart locations. Sears had around 1,000 locations remaining when the new year began.

Sear, which announced last Thursday that it would close more than 100 additional stores, said Wednesday that it would record a net loss of $200 million to $320 million for the fiscal fourth quarter.

The retailer is also pursuing new loans tied to its November plan to sell up to 140 properties after reaching a deal with the U.S. government to fund pensions. The company owes more than $1.4 billion in debt payments in 2018, according to market data analysis and research firm Debtwire.

"The reality is they’re still generating negative cash flow, so they have to find external funding," said Philip Emma, senior retail and credit analyst at Debtwire.

Bankruptcy is "not unrealistic" if the company can't renegotiate debt terms, he said.

Sears is closing another 103 stores Sears is closing another 103 stores and most will close by April.

The company already warned in early 2017 that there was "substantial doubt" about its long-term survival.

Sears reported that its sales in the November and December in stores open at least a year declined 16% to 17% compared to the same period a year ago. While it did not disclose holiday sales results Wednesday, Sears' performance contrasts with several other major chains. Target, Kohl's, Macy's, J.C. Penney and Nordstrom reported stronger-than-expected sales over the critical holiday period. Overall, the industry saw a 4.9% sales increase, the biggest since 2011, according to Mastercard SpendingPulse,

To be sure, there are some signs of improved finances. The company's fourth-quarter loss is better than the year-earlier period's $607 million loss. But it also shows that the retailer has not been able to stop the bleeding despite a series of aggressive cost-cutting measures.

"It is very hard to envision a scenario where Sears comes roaring back," said Jude Gorman, general counsel for Reorg Research, which tracks distressed companies. "It is all about managing the decline."

One of the key moves Sears announced Wednesday was another round of cost reductions. In addition to ongoing store closures, which totaled about 400 locations in 2017, the company will shed $200 million in costs this year.

Lampert himself is the source of much of the company's financial backing. He has provided various loans to Sears as the company tries to dig out of a retail crisis that has ensnared many iconic brands.

If he chooses to continue extending credit to Sears through his hedge fund, the company could yet live to fight another day.

"When implemented, the initiatives we are announcing today will represent an important forward step for Sears Holdings — one that will strengthen our financial position and sharpen our operating focus," Lampert, who rarely gives interviews, said in the blog post. "We will, of course, have a lot of work to do to prove we can deliver on our plans. But our leadership team is more aligned and committed to the transformation of our company than ever before."

The company said it had also raised $100 million in new financing and is aiming to land additional secured debt.

Sears stock rose 5.1%, or 16 cents, to close at $3.29.

Follow USA TODAY reporter Nathan Bomey on Twitter @NathanBomey.