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Sears sticks to course, closing weak outlets as sales fall steeply and rivals make gains
By Suzanne Kapner
This article is being republished as part of our daily reproduction of WSJ.com articles that also appeared in the U.S. print edition of The Wall Street Journal (September 14, 2018).
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 14, 2018 02:47 ET (06:47 GMT)
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