Sears Holdings poised to sell 140 properties

Sears Holdings has reached an agreement that will allow the retailer to sell an additional 140 locations.

Under terms of an agreement with the Pension Benefit Guaranty Corporation (PBGC), 140 Sears properties that were protected from being sold through a ring-fence agreement will be released in exchange for $407 million. Sears will use the funds for “financial flexibility” and to provide contributions to pension plans for the next two years, the company said.

"This agreement with the PBGC is another positive step forward which, upon closing, will provide our company with financial flexibility while supporting our commitment to honor our obligations to the associates and retirees covered by the pension plans," said Edward Lampert, Sears Holdings chairman and CEO. "While the lower interest rate environment has had a significant, unfavorable impact on the pension plans' funding, Sears Holdings has demonstrated its commitment to honoring this obligation."

Sears has to make a $37 million quarterly payment to the pension plans in December 2017. Following the $407 million contribution, Sears will be relieved of the obligation to make further contributions to the pension plans for approximately two years, aside from $20 million supplemental payment due in Q2 2018.

Through the closing of stores, the sale of assets, and the sale of the Craftsman brand, Sears said it has reduced the number of participants in the pension plan from 400,000 to 100,000.

The retailer also reported that it had total revenues of approximately $3.7 billion during the third quarter of 2017, compared with $5 billion in the prior year quarter, with store closures contributing to over half of the decline. Total comp store sales declined 15.3% during the quarter with Kmart store comp sales falling 13% and Sears comp sales decreasing 17%.

Sears also said that it expects to report a third quarter 2017 net loss between $595 million and $525 million compared to a net loss of $748 in the third quarter 2016.

Last week Sears Holdings announced that it was closing 63 more stores, including 45 Kmart locations.