Seritage Growth 2025 Q1 Earnings Misses Targets as Net Loss Widens 16.9%

Seritage Growth (SRG) reported its fiscal 2025 Q1 earnings on May 15th, 2025. The total revenue of Seritage Growth decreased by 20.3% to $4.60 million in 2025 Q1, down from $5.77 million in 2024 Q1, with specific segment revenue listed as follow: Rental income: $4.46 million, Management and other fee income: $142,000 and Total revenue: $4.60 million.

The company reported a net loss of $22.20 million in the first quarter of 2025, a 16.9% increase from the previous year's $18.98 million loss. Earnings per share deepened, showing a loss of $0.42 compared to $0.36 in Q1 2024. This reflects a worsening financial situation for the company, as the earnings per share indicate a negative performance trend.

Revenue
The revenue for Seritage Growth in Q1 2025 was $4.60 million, marking a 20.3% decrease from Q1 2024's revenue of $5.77 million. The rental income contributed $4.46 million to this total, while management and other fee income added $142,000. These reductions highlight ongoing challenges in revenue generation for the company.

Earnings/Net Income
Seritage Growth's losses deepened to $0.42 per share in 2025 Q1 from a loss of $0.36 per share in 2024 Q1 (16.7% wider loss). Meanwhile, the company's net loss widened to $-22.20 million in 2025 Q1, representing a 16.9% increase from the $-18.98 million loss recorded in 2024 Q1. The earnings per share indicate a continued negative trend.

Price Action
The stock price of Seritage Growth has edged up 2.09% during the latest trading day, has edged down 0.68% during the most recent full trading week, and has jumped 11.41% month-to-date.

Post-Earnings Price Action Review
The strategy of purchasing Seritage Growth (SRG) shares after a revenue drop and holding for 30 days has historically resulted in significant losses, highlighting the company's challenging financial performance. Over the past five years, SRG's stock price has fallen by 63%, reflecting negative market sentiment. The annualized return for this approach was approximately -10%, illustrating a clear decline in value. This strategy led to a total loss of 37.84%, with a return on equity (ROE) of -1,087.56% and a net margin of -34.23%. These figures underscore the strategy's ineffectiveness in generating profits. The consistent revenue decline, averaging 34.23% per year, is a critical factor contributing to the negative returns, making this approach unfeasible for profit-seeking investors.

CEO Commentary
"The Company's strategy following the completion of a smooth CEO transition remains the same. We will continue to pursue our Plan of Sale with the priority of repaying our remaining debt from the sale of assets. Our team is focused on executing transactions at appropriate pricing for our assets already in the market as well as taking the necessary steps to monetize the remaining assets in our portfolio to create value for our shareholders," said Adam Metz, Interim CEO & President. The company generated $29.9 million from asset sales and reported a net loss of $23.4 million for Q1 2025.

Guidance
The Company is currently negotiating a definitive purchase and sale agreement for a premier development asset with anticipated gross proceeds of approximately $70.0 million. The asset sales are expected to occur later in 2025 and beyond, with estimated gross sales proceeds for various assets ranging from $5 million to $200 million. The Company emphasizes that actual results may differ materially from these projections, highlighting the potential variability in timing and pricing based on market conditions.

Additional News
Seritage Growth Properties recently experienced a change at the executive level. On March 28, 2025, the company announced that Andrea L. Olshan would step down as CEO and President, with Adam Metz stepping in as Interim CEO. This leadership transition is part of the company's strategic review and ongoing execution of its Plan of Sale. Furthermore, on May 8, 2025, Seritage declared a preferred stock dividend of $0.4375 per Series A Preferred Share, payable on July 15, 2025, reinforcing its commitment to return value to shareholders. The company continues to navigate challenging market conditions, including elevated interest rates, which may impact asset sale proceeds and shareholder distributions.