Dive Brief:

• Sears Holdings on Wednesday announced new moves to boost its profitability and liquidity — including through a loan from its CEO's hedge fund and discussions to renegotiate terms on $1 billion in debt. But first, the bad news: The retailer said that comparable store sales at Sears and Kmart for the first two months of the fourth quarter — which includes the holiday season — were down 16% to 17% (a figure that includes reductions in some store pharmacies and electronics products).
• The department store retailer now expects a Q4 net loss to shareholders of $200 million to $320 million, according to a press release. The loss represents a hefty improvement over the $607 million Sears lost in the year-ago period. Sears said in the release that it was committed to return to profitability in 2018 and announced an annualized $200 million in unspecified cost cuts unrelated to recently announced store closures. A spokesperson for Sears did not immediately respond to a request for more details.
• UPDATE: The retailer also said Wednesday that it raised a new term loan of $100 million from subsidiaries controlled by CEO Eddie Lampert’s hedge fund, ESL Investments, a loan that could be good for an additional $200 million later if some conditions are met, according to a regulatory filing. That loan is backed by some ground leases and all Sears’ remaining unencumbered intellectual property, excluding the IP related to the Kenmore and DieHard brands.

Dive Insight:

Sears, like a lot of distressed retailers, needed a good holiday season. It did not have one.

The early figures for Q4 show a slide in comparable sales mirroring its third quarter, when comps fell a precipitous 15%, contributing to a total sales fall-off of 26% to $3.7 billion.

So far 2018 is looking a lot like 2017, with Sears closing stores and making incremental moves to shore up its finances and stave off bankruptcy. Meanwhile, its sales base continues to decline at an alarming rate. The company has pledged to return to profitability in 2018 — and it did indeed make significant progress in reducing its losses for much of 2017. But it’s still losing money, and borrowing heavily.

"Sears is taking additional steps to address its upcoming maturities in fiscal 2018 and improve its liquidity as its unencumbered asset base continues to decline and its business turnaround remains elusive," Moody's Vice President Christina Boni said in comments emailed to Retail Dive. "Despite brighter sales in the department store sector this holiday season, Sears continued to significantly underperform [on comps]."

Along with yet another loan for Lampert’s hedge fund, Sears said in the release that it had changed the advance rate for inventory under its second lien notes (to 75% from 65%) and is working on an agreement to improve terms in its $1 billion non-first lien debt. Lampert said in a blog post that if the retailer could not negotiate a refinancing agreement, it would "consider all other options to maximize the value of Sears Holdings' assets."

Sears has been able to stave off default for years largely through store closures (there have been around 400 in the past year alone), staff layoffs (numbering in the hundreds in 2017), asset sales, loan extensions and loans from Lampert's hedge fund ESL Investments, which provided hundreds of millions of dollars in credit in 2017. To try to revive sales, it's also partnered with Amazon to sell Kenmore products, tested new store formats and revived its holiday catalog.

The dwindling sales might be the bigger problem in the long run.  A retailer can only cut costs and close stores so much and remain viable. And there seems to be no end in sight to the customer bleeding.

"In essence, the whole group [of Sears store lines] remains in a tailspin, and it is clear that there is no chance of even a leveling-off in sales anytime soon," Neil Saunders, managing director of GlobalData Retail, wrote in November. "The dramatic loss of customers at existing stores continues apace, and we believe that there is a danger this trend could accelerate into the new year."