Department store retailer Sears has announced plans to spin-off its Hometown and Outlet businesses, and sell 11 stores, after swinging to a full-year loss of $3.1bn.

The US retailer yesterday (23 February) said it is looking to raise some US$770m through the moves, generating $270 from the property sales and between $400-500m from the spin-off. It is also working to improve liquidity by reducing expenses, and cutting peak inventory and peak borrowing needs.

The moves were revealed as the retailer swung to full-year and fourth-quarter net losses.

For the full-year to 28 January, the company booked a US$3.1bn loss against a $150m profit in the previous year. During the fourth-quarter, it reported a loss of $2.4bn, compared with a $374m profit the previous year.

Full-year revenue declined 2.57% to $41.6bn, with comparable-store sales down 3%. For the quarter, sales dropped 3.9% to $12.5bn on the back of a 3.9% comparable-store sales decline.

"We are taking immediate actions to address our fourth quarter performance including cost and inventory reductions, honed and targeted marketing, margin actions, and bringing in new talent to strengthen our merchandising and leadership team, like Ron Boire, who was recently named chief merchant and president, Sears and Kmart Formats," said president and CEO Lou D'Ambrosio.

"It's also important to distinguish between our earnings issue and the strength of our balance sheet, where we have significant assets and liquidity.  

"We are further strengthening the balance sheet by approximately $1bn through the actions we are announcing today regarding Hometown, Outlet, and Hardware stores, a real estate transaction, and inventory reductions."

The company has not ruled out breaking up the company further, with chairman Edward Lampert telling shareholders the company intends to "evaluate other opportunities to separate parts of our into separately owned companies".

Spin-offs would depend on whether the company thought the move would strengthen Sears Holdings' balance sheet, provide the separated business with flexibility to pursue their strategic and financial objective, and provide shareholders with the choice to hold shares in both or either company separately.

"As a result, management of each Sears Holdings portfolio business will have a clear focus on what it needs to do to improve its respective business, particularly the Sears and Kmart formats," he said.