Coverage: Sears reports larger loss, lower sales
Sears Holdings Corp. is limping into the critical holiday season, after the struggling company reported its quarterly sales fell 26 percent and it continues to close dozens of stores.
Lauren Thomas of CNBC.com had the news:
Sears, faced with mounting liabilities, continues to be in a race to sell off assets, cut costs and reduce debt, in a fight to keep the business afloat. Although same-store sales declines slowed during the latest period, they remain steep, illustrating the iconic retailer hasn’t won shoppers back. Heading into the holiday season, Sears’ options remain limited.
Sales at Sears and Kmart stores open for at least 12 months were down 3.9 percent during the second quarter, compared with a decline of 11.9 percent in the prior period. The 3.9 percent drop included a same-store sales decline of 3.7 percent at Kmart stores and a 4 percent decline at Sears stores. The company also said it saw positive comparable sales growth of 3 percent in July and 2.5 percent in August.
Its shares, which are heavily shorted, were up as much as 27 percent in after-hours trading on the news.
In a blog post, CEO Eddie Lampert reiterated Thursday he still believes Sears can accomplish its restructuring outside of bankruptcy, saying the alternative “could result in significant reductions in value.” It’s been more than a year since Sears warned it might not be able to continue “as a going concern.”
Chris Isidore of CNNMoney.com reported that the actual release of the earnings was delayed:
Sears had planned to report earnings before the market opened on Thursday but missed its own deadline and reported after the closing bell instead.
Investors, nervous about the delay, had sent shares of Sears Holdings down 9% during the trading day.
“I would say it’s unusual for any company, struggling or prospering, to not report when they said they were going to report,” said Robert Schulz, chief credit analyst overseeing retailers for Standard & Poor’s.
Company officials again said they were making progress closing unprofitable stores as part of their efforts to turn the company around. They vowed the company could one day be profitable again.
“We have worked hard to make the best possible decisions for the company given the options available to it and the variety of constraints it has faced,” said CEO and primary shareholder Eddie Lampert. “We continue to believe that Sears can successfully evolve into a smaller but profitable company.”
Charisse Jones and Nathan Bomey of USA Today reported that Sears may sell other assets:
In another bid to give the company an infusion of cash, Lampert, the company’s largest shareholder, made an offer in August to buy the retailer’s Kenmore household appliances brand and other assets for up to $480 million.
He described a speedy deal for Kenmore as “critical,” raising questions about the future of Sears if the sale doesn’t happen.
As a special committee continues to evaluate that proposed sale, the company noted that other assets may also be up for grabs.
Referring to its Home Services business, Auto Centers and vaunted DieHard brand, the company said in a statement that it continues “to explore ways to unlock value across a range of other assets … Options we are exploring include partnerships, sales or other” avenues to increase their distribution.