Sears Surges 40% Amid Cost-Cutting Initiatives, Updated Guidance

Shares of troubled retailer Sears Holdings Corp SHLD soared by nearly 50 percent Friday morning after the company issued details on its next phase of strategic transformation.

Sears' stock has been sitting near all-time lows as investor confidence in a turnaround remain low.

Game Plan

Sears said in its press release it will initiate the following programs:

• Target at least $1.0 billion in annualized cost savings through restructuring and streamlining operations.
• Create an incremental $140 million in liquidity by right-sizing its asset-based credit facility.
• Reduce outstanding debt and pension obligations by at least $1.5 billion.

Sears Chairman and CEO Edward Lampert noted these actions are expected to reduce its overall cash funding requirements.

"We believe these actions will enable us to focus our investments to drive our strategic transformation and the evolution of our Shop Your Way ecosystem through value enhancing partnerships, compelling offerings and a seamless online and in-store shopping experience for our members," Lampert stated.

Profitability

Sears further noted the company's initiatives are also expected to drive profitability.

Sears plans on capitalizing on its real estate through in-store partnerships. In addition, strategic options for the company's Kenmore, Die Hard, Sears Home Services and Sears Auto Centers businesses remain on the table.

Guidance

Sears also provided fourth quarter and full year fiscal 2016 guidance.

The company expects fourth quarter revenue to be around $6.1 billion and $22.1 billion for the full year. Wall Street analysts were already estimating the company's fourth quarter revenue to be $5.69 billion and $21.77 billion for the full year.

Image: Mike Mozart, Flickr