Eddie Lampert’s embattled Sears Holdings (SHLD, Financial) announced on Thursday its fourth-quarter and full-year 2017 results.
Sears revenues sank to $4.38 billion in the fourth quarter ended Feb. 3, compared to $6.05 billion in the prior year’s fourth quarter. The company made a net profit of $182 million, or $1.69 per diluted share, compared to a net loss of $607 million, or $5.67 per diluted share, for the same periods.
Net income for the fourth quarter included a $470 million benefit from tax reform, without which the company would have delivered a $288 million loss.
Adjusted earnings before interest, taxes, depreciation and amortization amounted to $2 million, its first positive result since 2014, compared to a negative $61 million last year. The company said it expects to see improvement in year-over-year adjusted Ebitda for the first quarter of 2018 as it increases liquidity to support its transformation.
"We also recognize that we need to do more if we are to deliver on our commitment to return to profitability in 2018,” Lampert, Sears chairman and CEO, said. “We will work to build on the progress we made in 2017, including ongoing actions to improve or close unprofitable stores and to unlock the value in our assets. Importantly, to ensure our long-term viability, we must substantially improve our sales and gross margin performance, including adjustments to our business model.”
Big-box retailer Sears has struggled to turn in a net profit since 2011 and has seen annual revenue declines since 2007. For 2017, revenue was $16.7 billion, down from $22.14 billion in 2016 and $53 billion in 2008. In an earnings conference call, the company attributed more than half of its revenue decline for 2017 to store closures.
Financials at the company have deteriorated as its transformation strategy has been slow to catch on. The plan has included implementing a Shop Your Way customer membership program, selling brands and closing stores. For 2018, it expects to save $200 million by closing more stores. It ended the year with 1,000 stores.
Sears shares declined 6.61% Thursday to $2.26. The company has lost 97% of its market value over the past 10 years.
Lampert became chairman of Sears in 2004 when he played an instrumental role in the merger of the company with Kmart, which he aided in emerging from bankruptcy. His career prior to the Sears investment included a 29% annualized return since the start of his hedge fund, ESL Investments, in 1998, CNN Money reported.
