Purchases made by Sears' (NYSE:SHLD) Shop Your Way loyalty members accounted for 74 percent of all sales for the first quarter.
However, even with the help of loyal shoppers, both Kmart and Sears stores in the United States had a decline in comparable sales, 7 percent and 14.5 percent respectively, due to more targeted promotional and marketing spend. In addition, the decline in sales has been attributed to the retailer's focus on sizing certain categories, including consumer electronics, to better fit the needs of members.
Sears reported a net loss of $303 million for the quarter, down from $402 million in the first quarter of 2014.
However, the company reported that it has the financial flexibility to continue to fund its transformation and meet obligations. As of May 2, the company had $726 million in credit and $286 million in cash. If the REIT transaction successfully closes, the results would change to $1.1 billion in credit and $2.3 billion in cash.
Sears expects the formation of the REIT, Seritage Growth Properties, to be declared effective this week. The REIT involves the sale and leaseback of 235 Sears and Kmart stores, with proceeds to exceed $2.6 billion.
"With the completion of the joint venture transactions with three leading shopping mall owners and operators, and the advanced formation of the Seritage REIT, we will become more productive with our physical store space," said Edward Lampert, chairman and CEO of Sears. "This will position Sears Holdings for long-term success consistent with our focus on our best stores, rewarding our best members and pursuing our best categories to transform Sears Holdings into a leading integrated retail membership-focused company leveraging our Shop Your Way platform."
The company has also reached an agreement with three of its ABL lenders, extending funding to 2020 to help with the retailer's transformation.
-See this Sears press release
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