The company, which also owns Kmart, said Friday that it is cutting costs by at least $1 billion a year. It also said that it was adding $140 million in liquidity by reworking its debt, giving the company more breathing room.
The Hoffman Estates, Illinois, retailer, which has been losing money for years, also said comparable-store sales during the holiday shopping season weren’t as bad as industry analysts had believed them to be.
Shares of Sears Holding Corp., which are already down 40 percent this year, soared 30 percent at Friday’s opening bell.
Sears had already announced last month the closing of 150 of its 1,500 stores. It did not announce new store closures Friday, but said it would “actively manage our real estate portfolio to identify additional opportunities.”
Job cuts may also be on the way as it streamlines its organization structure, but the company did not release any details. Sears had about 178,000 employees in the U.S. last year.
From November to January, which includes the holiday shopping season, Sears expects sales to have fallen 10.3 percent at its established stores. That’s better than the drop of 13.1 percent that Wall Street had expected, according to FactSet.
“We believe the actions outlined today will reduce our overall cash funding requirements and ensure that Sears Holdings becomes a more agile and competitive retailer with a clear path toward profitability,” CEO and Chairman Edward Lampert said in a company release.
Lampert, whose hedge fund has forwarded millions in funding to keep Sears afloat, has long pledged to turn the company’s fortunes around and that the retailer would find ways capitalize on its best known brands, as well as its vast holdings of land.
Lampert, a billionaire hedge fund manager, combined Sears and Kmart in 2005, about two years after he helped bring Kmart out of bankruptcy. But the retail landscape has undergone seismic shifts since then.
While Amazon.com had been up and running for almost a decade at that time, the titanic disruption in retail went into full force around the time of the recession a few years later.
And old rivals have made it tougher. J.C. Penney has brought back to its floors major appliances more than 30 years after abandoning the sale of refrigerators and stoves.
Sears has ramped up online services, but it’s having a hard time disguising its age. Stores are in need of a major redo.
Sears rose $1.64 to $7.18 in early trading.