As rapid changes and headwinds continue across the retail industry, we, at Sears Holdings, remain dedicated to building a member-centric retail offering that delivers convenience and value through our integrated store and online experience. Since the beginning of the year, we have been working with resolve to accelerate our transformation and achieve profitability.
SHOP YOUR WAY
We continue to expand our Shop Your Way ecosystem through a range of strategic partnerships and new offerings.
Sears Mastercard with Shop Your Way. Earlier this year, we launched our new Sears Mastercard in partnership with Citi Retail Services. The Sears Mastercard with Shop Your Way enables members to earn points everywhere they go in their daily lives. Points can then be redeemed on purchases ranging from everyday household consumables to larger items such as kitchen appliances sold by Sears and Kmart in store or online and on ShopYourWay.com.
Time Inc. / Synapse Group, Inc. In the second quarter, we announced our partnership with Time Inc. and its division, Synapse Group, Inc., to provide access to over 300 magazines to our members with the full subscription price awarded back in Shop Your Way points. Magazine titles are available on Sears.com and ShopYourWay.com, where members are able to choose an unlimited number of subscriptions and receive 100 percent of the cost back in points.
We have executed strategic transactions and partnerships to externalize our brands in order to broaden their reach, while we continue to participate in and benefit from their growth.
Kenmore Partnership. The recently announced collaboration with Amazon is the first of its kind for Kenmore and will significantly expand the brand’s reach to millions of customers across the U.S. This marks the broadest distribution of Kenmore outside of Sears branded stores and related online retail platforms. Additional revenue opportunities for Sears Holdings will be created through the Amazon relationship as Sears Home Services and Innovel Solutions (both Sears Holdings businesses) will supply the delivery, installation and extended product protection services for Kenmore products sold on Amazon.com.
Craftsman Transaction. Earlier this year, we completed the sale of the Craftsman brand to Stanley Black & Decker. The transaction facilitates the future growth of the Craftsman brand in and outside of our shopping platforms, while ensuring our participation in that upside. Not only will Sears Holdings continue to offer Craftsman-branded products in its stores and online platforms, but we are also unlocking significant value from the brand through a $525 million cash payment at closing and annual payments of between 2.5% and 3.5% on new Stanley Black & Decker sales of Craftsman products for the next 15 years.
We are optimizing our store footprint by right-sizing and opening innovative, smaller-format stores focused on our best categories and supported by our technology platforms.
New Sears Concepts. This year, we opened our newest Sears Appliances & Mattresses store in Pharr, Texas, building on the success of our Sears Appliances store launched in Fort Collins, Colorado, last year. At these locations, members can visualize how new appliances would look in a full-scale kitchen using a 122-inch interactive digital display and customize their design using in-store tablets. Members can also schedule appointments with in-store experts using the ‘Meet with an Expert’ feature on our Sears website. We expect to introduce additional smaller, specialized concept stores in the upcoming quarters.
New Auto Center Concept. In February, we opened a first-of-its-kind DieHard Auto Center Driven by Sears in San Antonio, Texas. The DieHard Auto Center leverages interactive in-store merchandise displays, state-of-the-art diagnostics technology and the expertise of our experienced associates in a contemporary, comfortable setting to help drivers make the right choices for their vehicle’s needs. Now, when you bring your vehicle to a DieHard Auto Center, you can have the same peace of mind you expect from DieHard products.
RETURN TO PROFITABILITY
We continue to move forward with our strategic restructuring to become a more nimble and efficient retailer. We have implemented a more integrated, leaner operational model resulting in a simpler organizational structure. We have also continued to optimize our product assortment focusing on our profitable, high-return Best Categories and using data analytics to better align with preferences of our Best Members. These actions have helped us make significant progress with continuous improvement in our Adjusted EBITDA. We will continue to take all necessary action to drive further improvements in our organization to achieve our profitability objective.
We have improved our liquidity and financial flexibility to invest in our transformation while meeting all of our financial obligations. The active management of our real estate portfolio has now unlocked $460 million in proceeds from property sales in 2017. Since the beginning of the calendar year, we have also executed various financing transactions to improve our liquidity, including an amendment to our existing Second Lien Credit Agreement to create $500 million Line of Credit Loan Facility and the extension of the maturity of our Letter of Credit Facility by a year to December 28, 2018.
All of our associates at Sears Holdings are committed to delivering convenience and value for our customers through our Shop Your Way membership program and our integrated store and online experience. We will continue to innovate, improve our efficiency, enhance our financial flexibility, broaden the reach of our brands and services and work toward our transformation more broadly in order to ensure our competitiveness in the future of retail.
Cautionary Statement Regarding Forward-Looking Statements: Certain statements contained in this post contain forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995. Statements that use words and phrases such as the company “anticipates,” “believes,” “continue,” “expects,” “intends,” “plans,” “transform,” “going to be” and similar expressions or future or conditional verbs such as “will,” “may,” and “could” are generally forward-looking in nature and not historical facts and are intended to identify forward-looking statements. Forward-looking statements are subject to various risks, assumptions and uncertainties, including risks, uncertainties and factors discussed in our most recent Annual Report on Form 10-K and other filings with the Securities and Exchange Commission, that may cause our actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by these forward-looking statements. We intend the forward-looking statements to speak only as of the time made and do not undertake to update or revise them as more information becomes available, except as required by law.