Sears to mark down the value of its name for third year in a row
Fiscal 2017 is the third consecutive year Sears will report an impairment charge tied to its trade name.
The charge is expected to be between $50 million and $100 million.
A year ago, that charge was $381 million; i n fiscal 2015, the charge was $180 million.
Sears Holdings SHLD on Thursday said it expects to record an impairment charge tied to its trade name of between $50 million and $100 million for fiscal 2017.
This marks the third consecutive year the department store owner has reported such a charge, which lowers the value of a company's intangible assets — including its brand names, favorable lease commitments and shopper loyalty.
A year ago, that charge was $381 million for Sears. In fiscal 2015, the charge was $180 million.
"The writedown is an accounting exercise which ultimately results from decreases in our revenues," a Sears spokesman told CNBC. The company also on Thursday revealed that sales in the fourth quarter of 2017 should come in around $4.4 billion, compared with revenue of $6.1 billion a year ago.
U.S. companies started recording these impairment charges in the early 2000s, when the Financial Accounting Standard Board began asking businesses to assess the value of their assets on a yearly basis.
J. Crew, Lands' End (which was once owned by Sears), Sprint S and other retailers have also recorded charges tied to their trade names in recent years.
In its 10-K filing for fiscal 2016, Sears said the last writedown of $380 million reduced its intangible assets' carrying value to $431 million as of Jan. 28, 2017. In addition to Sears, this total includes the Kenmore and DieHard names. The carrying value of those intangible assets was $812 million at the start of 2016.
Sears has said it's transitioning toward a "less asset-intensive" business, as it closes more underperforming stores and looks to monetize some of its other holdings, including Sears Home Services .
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