Sears continues to close unprofitable stores in an attempt to increase sales impact and return the company to profitability. Funding from Lampert has also helped but many stores continue to show weak sales and are unprofitable.
Seritage Growth Properties (NYSE: SRG) reported in an SEC filing that Sears Holdings Corp. (NASDAQ: SHLD) has exercised its right to eliminate its leases on 19 unprofitable stores. The store sum up a total of 1.9 million square feet of space available for leasing. Rent is about $5.9 million or a whopping 2.7 percent of Sears’ annual base rent. Sears plans to continue to pay rent to Seritage until the retailer exits the space in April. A termination fee of one year base rent as well as one year of estimated annual operating expenses.
Last month, Sears disclosed it had obtained a letter of credit facility provided by affiliates of Lampert’s hedge fund, ESL Investments. “This loan facility will provide Sears Holdings with additional financial flexibility and support our operations as we meet all of our financial obligations,” Sears CFO, Jason Hollar claimed.
This is the second occasion that Sears has closed a large amount of stores. Previously in September, the retailer had terminated leases on 17 unprofitable stores which would officially close in January. Those stores accounted for $5.8 million in rent stated by an SEC filing at the time.