What happened
After a three-day slide, shares of Sears Holding Corp (SHLDQ) were bouncing back today as the struggling retailer said it amended a loan agreement to give it more payback time. As a result, the stock was up 6.5% as of 3:21 p.m. EDT.
So what
In a filing, Sears said it would extend the maturity date on a previous $593 million loan by two years to July 20, 2020, and that it would also receive an additional advance of $186 million, bringing the total loan to $779 million. The company said it would use the additional advance to pay back outstanding loans from a prior real estate loan facility, and the new loan is guaranteed by 69 Sears properties.
Image source: Sears.
The announcement comes after the retailer posted another awful earnings report that included a wide loss, a double-digit drop in comps, and revenue sliding by about a third. Sears also said it would shutter 72 stores in the near future, a sign that the business continues to collapse.
Now what
While a loan extension is good news for Sears, it does little to alter the underlying viability of the business. Sears' stores are decrepit; customers continue to flee, and its brand value is virtually non-existent. CEO Eddie Lampert continues to make moves to extend the life of the company, but it won't be enough to save a sinking ship.
