Revenue for Sears U.S. slides again amid cuts

Third-quarter $558M losses were better than 2016 results

NEW YORK— Sears said Thursday that revenue and a key sales figure plummeted in its most recent quarter as it closed stores, shut down pharmacies at some Kmart locations and lost shoppers to other retailers.

But the struggling department store operator did have one bright spot: Its third-quarter loss narrowed from a year ago as it aggressively cut costs.

Shares dropped almost 4 per cent Thursday.

Sears has been cutting costs as it faces pension funding issues and lower sales. Competition from Home Depot, Amazon and other retailers has been prompting the company to sell brands and close stores as it loses ground in the market. In October, it cut Whirlpool-branded appliances from its operations, curtailing a business relationship that dates back more than 100 years.

Sears said Thursday that part of its turnaround plan is to open smaller stores. In June, it opened its first Sears Appliances & Mattresses store in Pharr, Texas, which focuses on selling washing machines, microwaves or bedding. Two more were recently opened in Honolulu and Camp Hill, Penn., the company said.

For drivers, it opened three DieHard Auto Centers in Texas and Michigan, where customers can get an oil change or replace their tires. Sears chief financial officer Robert Riecker said in a pre-recorded call that the concepts were “successful” and that the company plans to open more of them.

Still, sales at established stores, a key measure of a retailer’s health, plunged 15.3 per cent during the third quarter. That’s more than double the decline it reported in the same period a year ago.

“The dramatic loss of customers at existing stores continues apace,” said Neil Saunders, a retail analyst for GlobalData, “and we believe that there is a danger this trend could accelerate into the new year.”

The company reported a net loss of to $558 million (U.S.), or $5.19 per share, in the three months ending Oct. 28. In the same period a year ago, it reported a loss of $748 million, or $6.99 per share.

Revenue dropped 27 per cent to $3.66 billion, with more than half of that decline coming from store and pharmacy closures, the company said. The retailer plans to close 63 stores, including 45 Kmart stores, by late January. Those closures are on top of 250 stores already announced in 2017.

Sears said Thursday it will continue to maintain “extreme cost discipline” going into the fourth quarter.

Shares of Sears Holdings Corp. fell 16 cents, or 3.8 per cent, to $4.05 in trading Thursday. Its stock is still down about 50 per cent so far this year.

“The dramatic loss of customers at existing stores continues apace.” NEIL SAUNDERS GLOBALDATA RETAIL ANALYST