Stripped-down Sears narrows loss in Q4

Without the aid of Lands' End, Sears Canada or the numerous stores shuttered by Sears Holdings recently, the retailer backtracked in terms of fourth-quarter revenue and full-year income. However, one bright spot was a narrowing of Sears' loss during the quarter.

During the fourth quarter ended Jan. 31, 2015, revenues were down 23.6% to $8.1 billion, compared to $10.6 billion in the year-ago period ended Feb. 1, 2014. Sears broke it down this way: $1.1 billion of the decrease can be attributed to the absence of Sears Canada, and $530 million due to the separation of the Lands' End business.

With fewer stores to generate revenue, that's another $497 million missing from this year's totals. The company closed 234 underperforming Kmart and Sears stores in 2014 -- that's out of more than 1,700 stores total. Additionally, said the company in a statement, Sears "expects to migrate the shopping activity of highly engaged members who previously shopped closed stores to alternative channels. As a result, we hope to retain a portion of the sales previously associated with these stores by nurturing and maintaining our relationships with the members that shopped these locations."

For the full year, revenues were also down -- $31.2 billion represents a 13.8% decline for the year.

However, Sears Holdings' net loss narrowed to $159 million for the fourth quarter, compared to last year's loss of $358 million.

Full-year net loss painted a different picture: 2014's loss of $1.7 billion is steeper than last year's loss of $1.4 billion.

Additionally, domestic adjusted EBITDA increased to $125 million in the fourth quarter, putting the metric back into the profit zone after a loss of $92 million in the prior-year fourth quarter. Sears did not fare so well for the full year, with domestic adjusted EBITDA decreasing to a loss of $647 million (compared to 2013's loss of $490 million).

"While we clearly believe that we can improve upon these results, we are pleased with the positive trend that started in the third quarter, and we currently expect this level of improvement to carry forward into our full year 2015 results," said chairman and CEO Edward Lampert. "We believe that the changes we are making to focus on our best stores, reward our best members and pursue our best categories will help us continue to transform Sears Holdings into a leading integrated membership-focused company."

The company maintained, as it has repeatedly over the last several months, that it "has the financial flexibility to fund its transformation and meet its obligations," with approximately $800 million available in its credit facility and $250 million in cash. According to CFO Rob Schriesheim, the retailer's actions over the year have generated $2.3 billion in liquidity.

"We are continuing our efforts to develop Sears Holdings as a membership company, without the significant asset intensity of its traditional retail business," said Schriesheim.

He added that the retailer is continuing to explore its option to form a Real Estate Investment Trust (REIT) to purchase between 200 and 300 Sears and Kmart stores. If the company goes through with the formation and separation, it is expected to take place in May or June of this year and will deliver proceeds to the company of at least $2.0 billion.