ILLINOIS: Sears Holdings Corp. said its loss narrowed last quarter on fewer one-time expenses but sales dropped 20%, hurt by store closings and weaker revenue from clothing and consumer electronics.
The Hoffman Estates, Ill., operator of Sears and Kmart department stores posted a net loss of $454 million for its third quarter ended Oct. 31 compared with a loss of $548 million a year earlier. Excluding items, the losses would have been $350 million and $288 million, respectively.
Chief Executive Eddie Lampert said he remains optimistic about an earnings turnaround and that heading into the fourth quarter, Sears is focused on products and promotions designed to boost member engagement through the holiday season.
Same-store sales, a measure that excludes store openings and closings, declined 7.5% at Kmart and 9.6% at Sears domestic stores. Sears stock price, down 42% so far this year, was off 6.9% at $19 apiece at 4 p.m. on Thursday.
Sears hasn’t strung together three straight quarters of profits since the period ended January 2008, according to FactSet data. It was profitable in the second quarter of this year, helped by its spinoff of 235 properties into a real-estate investment trust it created called Seritage Growth Properties—but that was preceded by 12 straight quarters in the red.
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In addition to the Seritage real estate deal, Sears also created joint ventures that hold additional properties with three mall owners. Together, those deals raised $3 billion in proceeds.
Sears on Thursday said it would continue taking “significant actions” to alter its capital structure to position it for profitability. The retailer ended October with $294 million in cash and $963 million in immediately available credit.
The company has been working to remake itself from a traditional, store-networked retail business into a more member-centric retailer by shedding assets and using a platform that tracks shoppers’ behavior and then sends customers coupons for specific items. The program rewards shoppers with points redeemable for future purchases.
Sears’ focus on achieving profitability has affected sales. But it has said it is logging improvements in profitability in “primary focus” categories despite sales declines. More than half the drop in same-store sales at Sears and Kmart came from declines in apparel and consumer electronics, which it said are lower-margin categories.
The company had 1,687 stores at the end of the quarter, down from 2,249 a year earlier.
Sears reported a per share loss $4.26 compared with $5.15, a year earlier. Excluding certain items including store closures, its adjusted loss widened to $2.86 a share from $2.71.
Revenue dropped to $5.75 billion from $7.21 billion.
Sears’s gross margin decreased to 21.9% from 22.2% while overhead costs increased to 28.3% of revenue from 27.9%, the company reported.
