Dallas, Texas 06/09/2015 (Financialstrend) – It is becoming clear why Sears Holdings Corp (NASDAQ:SHLD) is rushing to roll out a real estate investment trust. The company’s string of losses continued in the first quarter much to the concern of investors. A REIT transaction is seen as one of the options the company can use to raise the much needed cash for reinvigorating its ailing retail business.
Sales Slump Concern
The retailer might have posted a lower than expected loss for the quarter, but a slump in sales is not going well with the Street. Plans to reduce investments in advertising and discounting also continues to raise concerns whether Sears Holdings Corp (NASDAQ:SHLD) will be able to attract new customers
Sears Holdings Corp (NASDAQ:SHLD) might have become more efficient on replacing traditional marketing with digital and tailored advertisements but a slowdown in sales is still a point of concern. The retailer is trying to address the persistent slump in sales by a shift of focus to private label apparel. The idea is to stock its stores with less expensive apparel that can attract sales.
Sales for the quarter came in at $5.9 billion down from a high of $7.9 billion posted a year earlier. The decline in sales came on the heels of Sears Holdings Corp (NASDAQ:SHLD) closing some stores as well as spinning off Lands’ End clothing business. Sells from existing stores were down by 14.5%.
Sears REIT Plans
The company is looking to reinvigorate sales by operating an online and offline business as part of its Shop Your Way Loyalty Program. The program is already turning out to be a success having accounted for 70% of eligible sales
The company plans to raise a total of $2.6 billion on its REIT, which currently awaits the SEC approval. As part of the REIT, Sears plans to offload and lease back a total of 235 properties. The transaction will also see the purchase of interest in the joint ventures
The retailer hopes that by offering the REIT it will be able to raise a substantial amount of cash. The cash is to be used to revitalize the long-suffering retail business that continues to face major headwinds.