Sears Holdings Corp. on Friday announced that CFO Jason Hollar has resigned from the company “to pursue another career opportunity” after seven months in the role. Rob Riecker, controller and head of Capital Market Activities, has been appointed to replace Hollar, effective immediately, the company said in a press release.
The company also reiterated that it continues to make efforts to cut costs, including 150 non-profitable stores (including 108 Kmart and 42 Sears locations) that have already been closed, plus the planned closure of 92 underperforming Kmart pharmacies and 50 Sears Auto Center locations. In another cost-savings effort, the company is eliminating management positions at Sears and Kmart.
All told, the company said it will best its savings goal of $1 billion to realize $1.25 billion in savings for the year; $700 million has already been saved through various efforts.
Hollar's departure is the latest in a stream of top executives leaving the struggling retail company, which once stood as an Amazon-like disruptor selling Americans everything from apparel to houses in its heyday. Alasdair James, president and chief member officer of Sears Holding Co.’s Kmart unit since 2014, left the company last month; Jeff Balagna, Sears executive vice president, and Joelle Maher, Sears president and chief member officer, left abruptly in December.
Last month, Sears expressed diminished hopes in its ability to continue operating, according to its annual report filing with the Securities and Exchange Commission. “Our historical operating results indicate substantial doubt exists related to the Company's ability to continue as a going concern,” according to its 10K filing. “If we continue to experience operating losses, and we are not able to generate additional liquidity through the mechanisms described above or through some combination of other actions, while not expected, we may not be able to access additional funds under our amended Domestic Credit Agreement and we might need to secure additional sources of funds, which may or may not be available to us.”
In recent years, to raise cash, Sears Holdings has leveraged much of its formidable property holdings into a real estate investment trust, sold off brands like Lands’ End in 2013 and this year its iconic Craftsman tool unit to Stanley Black & Decker for $900 million. It has also taken a series of loans from CEO Eddie Lampert's hedge fund, most recently another $200 million line of credit. The company has also been closing stores, and noted that as of Friday, it had received non-overlapping bids in excess of $700 million on more than 60 more real estate properties. As a result of the Craftsman transaction and the sale of real estate properties, the company expects to report positive net income for the first quarter of 2017, ranging between $185 million and $285 million, which excludes the impact of any additional store closure announcements, real estate sales or impairments, according to a press release.
But little of the savings or income is going to boost the company's prospects. Sears said it continues to experience "softness in store traffic and elevated price competition." In a note emailed to Retail Dive Monday, Moody's Investors Service noted the continued vulnerability of the struggling retailer's finances.
"Sears’ financial performance remains extremely weak, which is prompting the acceleration of cost reductions by an additional $250 million," Moody's Vice President and Senior Analyst Christina Boni said in a statement emailed to Retail Dive. "Its effort to sell real estate which has produced over $700 million of bids currently will enhance liquidity, but accelerates the timeline required to stem operating losses as it asset base diminishes."
Since the beginning of the fiscal year, year-over-year same-store sales at Sears and Kmart declined 11.9% on a combined basis, a 10.8% fall when excluding consumer electronics. Its Home Services business continued to perform well and the company said Friday that it's positioned for continued growth for the balance of the year.
"Earlier this year, we initiated a strategic restructuring program and committed to improving our operating performance and financial flexibility in a very challenging retail environment," Lampert said in a statement. "While we have made significant progress in reducing our cost base and enhancing our member value proposition, we need to take further action. Accordingly, we will increase our structural cost savings target by $250 million on an annualized basis and accelerate our efforts to maximize value from our real estate portfolio, which we believe will improve our financial flexibility as we pursue our strategic transformation."