Sears Reports Widening Losses and Tumbling Sales
September 13 2018 - 6:55PM
Dow Jones News
By Suzanne Kapner
Sears Holdings Corp. is limping into the critical holiday
season, after the struggling company reported its quarterly sales
fell 26% and it continues to close dozens of stores.
Total revenue plunged by more than $1 billion to $3.18 billion
for the three months ending Aug. 4, compared with a year earlier.
Sales excluding newly opened or closed stores fell 4.0% at Sears
and 3.7% at Kmart locations.
The quarterly decline at existing stores wasn't as sharp as it
has been in recent quarters. In fact, executives said same-store
sales turned positive in July and August. Overall, the company
hasn't posted a quarterly gain since 2011.
"We continue to close unprofitable stores, and we are hopeful
that we can stabilize our store base at a meaningful level in the
near future," Chief Executive Edward Lampert said in a news
release.
The company lost $508 million for the period, compared with a
$250 million loss a year ago.
The results contrast with other retailers, including Walmart
Inc. and Target Corp., which last month reported some of their
strongest sales gains in a decade. The strong economy, rising wages
and low unemployment is spurring Americans to spend more at
traditional chains, even as Amazon.com Inc. continues to expand
quickly.
Sears has closed 384 stores since last year and is struggling to
attract shoppers to its remaining Sears and Kmart locations. The
company had 866 stores as of Aug. 4.
The company, which has struggled for years, has been selling
assets, closing stores and getting cash injections to stay afloat
from Mr. Lampert, a financier who is its chief executive, chairman,
largest shareholder and biggest creditor.
Mr. Lampert said in a blog post that the turnaround "has taken
far longer than we expected." He added that Sears, like other
retailers, has been hurt by the shift to online shopping, but also
has been at a disadvantage due to its pension obligations, which
have totaled $4.5 billion since 2005.
Sears announced the closure of another 46 stores last month,
refinanced some debt and reached a deal to terminate the liens on
12 real estate properties in return for $32 million it deposited in
an escrow account for its pension plan.
The company has also been in talks with Mr. Lampert who, through
his hedge fund ESL Investments Inc., has offered to buy the Kenmore
brand for $400 million and the home-improvement business of Sears
Home Services for as much as $80 million.
Any deal would include a go-shop period, in which Sears could
consider higher offers from other parties.
Sears has created a special board committee to evaluate the
proposal. But the offer has put the board in the awkward spot of
deciding whether to sell one of the company's prized brands or hold
out as Sears's business continues to deteriorate and a major debt
payment looms in October.
The company sold its Craftsman brand last year and has forged a
partnership with Amazon.com Inc. to sell DieHard tires on its
website as well as to broaden its installation service to include
other brands of tires bought on Amazon.
The company's shares, which traded as high as $144 more than a
decade ago, have collapsed and now change hands at just over $1. On
Thursday, the shares fell 9% to close at $1.21, but traded up 18%
after the market closed. At a time when Amazon has crossed the
trillion-dollar market value, Sears, which was the Amazon of the
20th century, sports a market capitalization of less than $150
million.
The retailer waited longer than usual to reveal its latest
results. It had scheduled the release for Thursday morning, which
was 40 days after the quarter's end -- the deadline for reporting
to the Securities and Exchange Commission. Sears then postponed the
release until after the U.S. stock market closed.
Write to Suzanne Kapner at Suzanne.Kapner@wsj.com
(END) Dow Jones Newswires
September 13, 2018 18:40 ET (22:40 GMT)
Copyright (c) 2018 Dow Jones & Company, Inc.
Sears (CE) (USOTC:SHLDQ)
Historical Stock Chart
From Aug 2024 to Sep 2024
Sears (CE) (USOTC:SHLDQ)
Historical Stock Chart
From Sep 2023 to Sep 2024