Sears is looking to raise more cash, announcing that it is planning a rights offering that may raise up to $625 million.
The company, which runs Kmart and its namesake stores, also said Monday that it struck a leasing deal with European fashion retailer Primark.
Sears has been cutting costs, reducing inventory and selling assets — including a large portion of its stake in Sears Canada — to return to profitability. Its biggest albatross remains its stores, which critics say are outdated and shabby.
Chairman and CEO Edward Lampert combined Sears and Kmart in 2005 about two years after he helped bring Kmart out from under bankruptcy protection. The company has since faced mounting pressure from nimbler rivals like Walmart and Home Depot.
Sears is also facing broader structural issues. Like other stores catering to the low- to middle-income customers, Sears is grappling with a slowly recovering economy that’s not benefiting all Americans equally. It’s also trying to catch up to customers who are steering clear of stores and shopping online.
Sears Holdings Corp. said the rights offering will allow its stockholders to buy up to $625 million senior unsecured notes due 2019 and warrants to buy shares of its common stock. It anticipates up to $625 million in proceeds if the offering is fully subscribed and closes as planned.
The proceeds will be used for general corporate purposes.
Sears’ lease agreements with Primark are for seven standalone stores in malls. Sears will still have a significant presence at six of the locations. Primark will lease about 400,000 net square feet of retail space in the Northeastern U.S. and is expected to receive the space over the next 12 to 18 months.
Earlier this month, Sears Holdings said it would sell most of its stake in its Canadian unit to raise as much as $380 million. Lampert’s private investment company, ESL Partners, announced on Friday that it and several affiliated entities had purchased about 17.7 million of the Sears Canada shares sold by Sears Holdings. As a result the ESL entities now own about 46.7 % of the Canadian company’s common shares and have the option to raise its stake to 49.5%.
