Sears 3Q loss widens as sales soften at stores
HOFFMAN ESTATES, Ill. - Sears' third-quarter loss widened as the ailing department store operator's results were hurt by weaker sales at its Kmart and Sears stores.
The quarterly results underscore the
challenges Sears (SHLD) faces as it heads into the critical holiday shopping
season. This period is important for retailers because it can comprise up to 40
percent of their annual revenue.
The retailer is also in the midst of
shifting its business, with less emphasis on its brick-and-mortar stores. It
has nearly 2,500 stores in the U.S. and Canada.
"We are transitioning from a
business that has historically focused on running a store network into a
business that provides and delivers value by serving its members in the manner
most convenient for them: whether in store, in home or through digital
devices," Chairman and CEO Edward Lampert said in a statement.
Sears is concentrating on its Shop
Your Way Loyalty program, with Lampert saying that the company is enhancing
membership benefits and developing digital and social relationships with
members. The retailer said that 70 percent of its sales are made to Shop Your
Way members, up from 65 percent in the second quarter.
For the three months ended Nov. 2,
Sears Holdings Corp. lost $534 million, or $5.03 per share. That compares with
a loss of $498 million, or $4.70 per share, a year earlier.
The Hoffman Estates, Ill., company
said Thursday that revenue fell 7 percent to $8.27 billion from $8.86 billion
mostly because it had fewer Sears and Kmart stores operating.
Revenue at stores open at least a year
dropped 3.1 percent. The figure fell 4 percent at Sears' locations and declined
2.1 percent at Kmart stores.
Revenue at stores open at least a year is a key gauge of a retailer's health because it excludes results from stores recently opened or closed.
Sears, like other stores catering to
low to middle income shoppers, is navigating a difficult economic environment.
Its shoppers are grappling with old worries like juggling their stagnant wages
with daily living costs. On top of that, many low-to-middle income shoppers
continue to struggle with a 2 percentage-point increase in the Social Security
payroll tax since Jan. 1. They're also facing rising health care costs.
Such a tough environment is putting
even more pressure on Lampert as he tries to turn the chain around. The storied
retailer hasn't adapted as bigger, nimbler rivals such as Wal-Mart and Home
Depot have stolen away customers over the years.
The third-quarter results come as
Sears announced late last month that it's considering separating its Lands' End
catalog business and Sears Auto Center businesses from the rest of the company.
The retailer also plans to continue closing some of its unprofitable stores and
is selling some store leases in Canada.
Last year, Sears announced plans to
restore profitability by cutting costs, reducing inventory, selling off some
assets and spinning off others. Those moves helped it reduce net debt by $400
million and generated $1.8 billion in cash from the asset sales in the latest
fiscal year.
Its shares finished at $61.70 on Wednesday. They are up 49 percent so far this year.