Sears Holdings Corp.’s stock soared in trading Friday morning after the troubled retailer said it hammered out a plan to cut costs by as much as $1 billion this year.
“To build on our positive momentum, today we are initiating a fundamental restructuring of our operations that targets at least $1 billion in cost savings on an annualized basis, as well as improves our operating performance,” said Edward Lampert, chairman and CEO of Sears, in a statement. “To capture these savings, we plan to reduce our corporate overhead, more closely integrate our Sears and Kmart operations and improve our merchandising, supply chain and inventory management.”
According to the retailer, the latest round of debt reduction would not include shuttering more Sears or Kmart doors than previously announced. The company announced last year it would close a large number of its stores. In the fourth quarter of 2016, Sears confirmed plans to close 150 stores.
In Friday’s statement, Sears Holdings said it would reduce costs specifically by consolidating corporate and support functions, hone its supply chain and inventory management, and trim its real-estate portfolio.
The news of the company moves sent shares up more than 40 percent in early morning trading, with the stock hovering around $7.10 a share.
“In the first several weeks of 2017, we undertook a series of transactions to optimize our capital structure and unlock value across our wide range of assets,” said Lampert. “We also reached an agreement to amend our asset-based credit facility, which further enhances our liquidity and financial flexibility. Furthermore, we intend to use net proceeds from our announced Craftsman and real-estate transactions, as well as from improvements in the operating performance of the company, to meaningfully reduce our outstanding obligations and their associated expenses.”
The year has seen a rocky start for many retailers.
Earlier this month, Macy’s Inc. was said to be in talks with several potential buyers. The department-store chain had already announced it would cut more than 10,000 jobs and continue to close stores.