Sears is borrowing more money from CEO Eddie Lampert’s hedge fund.
Lampert, through his hedge fund ESL Investments, has agreed to give the company a $US200 million credit line.
“This facility is intended to provide the company with the flexibility to generate additional liquidity on an as-needed basis,” Sears CFO Rob Riecker said in a statement. “This adjustment to our capital structure demonstrates that Sears Holdings will continue to take actions to generate liquidity and manage our business while meeting all of our financial obligations.”
Sears shares rallied by as much as 7% on Monday. The stock has lost nearly 40% of its value in the last year.
Over the past two years, Lampert and his hedge fund have loaned Sears more than $US1.6 million to keep the business in operation.
The company has also been raising money by closing hundreds of stores and selling off real estate. The company has announced more than 300 store closures so far this year.
“This is part of a strategy both to address losses from unprofitable stores and to reduce the square footage of other stores because many of them are simply too big for our current needs,” Sears CEO Eddie Lampert said in a blog post on the closures.
The closings will bring Sears’ store count to less than 1,140, down from 2,073 five years ago.
Sears is trying to raise cash following years of declining sales.
In the most recent quarter, Sears’ sales overall tumbled more than 20% to $US4.3 billion, which the company blamed on store closures and declining sales at its stores open at least a year. Same-store sales plunged 12.4% at Sears stores and dropped 11.2% at Kmart stores.
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