Sears loss narrows in first quarter

NEW YORK: Sears Holdings Corp, the retailer run by hedge fund manager Edward Lampert, posted a narrower first-quarter loss, helped by asset sales and improving margins.

The loss shrank to $303 million, or $2.85 a share, from $402 million, or $3.79, a year earlier, the Hoffman Estates, Illinois-based company said in a statement yesterday.

Lampert, Sears’s chief executive officer and largest shareholder, has been lopping off assets such as the Lands’ End clothing business, aiming to stem the flow of red ink.

He’s also working on forming a real estate investment trust named Seritage Growth Properties, which will buy store locations and lease them back to the retailer.

Sears said yesterday that it expected that transaction to raise $2.6 billion.

“The operating results for Sears are a heck of a lot less important than the liquidity that spinning Seritage out is going to provide them,” said Matt McGinley, an analyst at Evercore ISI in New York.

The REIT deal, which lets the company generate cash from its sprawling property holdings, has helped fuel a rally in the shares. Sears’s stock rose 24% this year through the end of last week, following an 11% decline in 2014.

The company’s retail operations remain mired in a slump. Comparable-store sales, considered a key gauge of retail performance, plunged 7% at Kmart and 14.5% at Sears last quarter. The companywide decline totalled 10.9% in the period, which ended on May 2.

Sears, which has posted 12 straight quarters of losses, did see some operating improvement, though. Gross margin — the amount of profit left after subtracting the cost of goods sold — widened at both Sear-sand Kmart. There were fewer markdowns in categories such as clothing and appliances, bolstering results.

The company also said that it expected to reach an agreement in the current quarter to extend and refinance its $3.3 billion revolving credit line, which expires next year, to 2020.