The new US tax law has helped Sears Holdings Corp. (NASDAQ: SHLD), a retailer that had been facing some rough times until the latest quarter, to swing its way towards a profit. Previously, the retailer had been forced to shut down many of its stores and was in heavy debt as a result of the money it had borrowed to keep its head above the water.
In the latest quarter, Sears Holdings reports a net income of $182 million. This amounts to $1.69 per share since the new tax law has been out. In the same period the previous year, the retailer had faced a loss of $607 million or $5.67 per share. Currently, Sears has a non-cash tax benefit of $470 million.
Sears CEO reports that they will continue to streamline operations despite the rise in profit
Sears, which had been facing tough competition all these years and dwindling sales, was forced to streamline many of its operations and bring down the cost of items. Although the retailer is now on more stable grounds, Sears will continue to shut down underperforming branches and sell underperforming assets.
The CEO of Sears said that they had made a significant profit in the year 2017 and in order to continue to make a profit in 2018, they have to cut down unnecessary operations and find the value in their assets.
In the past, Sears has faced a lot of bad news. Previously, a filing by the SEC had the company doubt its ability to stay in business. The only way was to sell their assets and to borrow as much money as possible.
Sears also owns Kmart and the company had to lay off nearly 220 employees from its corporate office last year. The retailer will be shutting down more of its locations this spring. More than 400 stores were shut down in 2017.
The S&P Global gave poor ratings to the retailer after SEC filings in January revealed that the retailer had to renegotiate almost $1 billion in debt.
The last profitable year for Sears was nearly 8 years back in 2010. Since then, it has racked up nearly $10.4 billion in losses. The brand was once a household name and the damage to its name has been showing up in its financial results up until now.
Other stores like Macy's, JCPenney's, and Kohl's are also facing a tough time as a majority of their customers are now swinging towards online purchases due to the convenience it offers.