Sears Holdings (NASDAQ:SHLD) reported its first quarterly profit since 2012 as a result of selling stores. However, the struggling retailer still reported a steep decline in revenue, 22.5 percent.
This quarter the company sold 235 stores, along with its 50 percent interest in joint ventures with three mall operators, to newly created REIT Seritage Growth Properties for $2.7 billion. The REIT leases the stores back to Sears.
Sears is expecting to gain $1.4 billion from the transaction, Reuters reported. Thus far, the company received $508 million in the second quarter, and the rest will be recognized over the life of the leases.
The sale helped Sears gain a profit of $208 million, compared with a $573 million loss one year earlier, making this the first profitable quarter since April 2012. Now Sears' depleted cash flow is rising to $1.8 billion, from just $250 million in January.
The cash will help the retailer institute a turnaround plan that revolves around its loyalty program and the closing of under-performing stores. In the first quarter, loyalty program members accounted for 74 percent of all sales at Sears.
The 10.8 percent drop in revenue for same-store sales is due in large part to the shrinking of Sears' consumer electronics businesses.
-See this Reuters article
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