Struggling Sears logs loss of $548 million
Quarterly declines now 10 in a row
Sears Holdings Corp., the department-store chain controlled by hedge fund manager Edward Lampert, posted its 10th-straight quarterly loss Thursday as sales continued to decline.
The third-quarter net loss widened to $548 million, or $5.15 a share, from $534 million, or $5.03 a share, a year earlier, the Hoffman Estates, Ill.-based retailer said in a statement. Revenue in the three months that ended Nov. 1 slid 13 percent to $7.21 billion.
Lampert — the retailer’s chairman, chief executive officer and largest shareholder — has been selling and spinning off assets to raise cash during more than three years of losses and 31-straight quarterly sales declines. The plan to revive profitability entails shrinking the chain’s store base while increasing sales online and through its shopper-loyalty program. Sears said last month that it may raise money by selling and then leasing back as many as 300 of its stores.
“It doesn’t solve anything for them,” Matt McGinley, an analyst at Evercore ISI in New York, said before the results were released. “It just buys time.”
Sears shares fell $1.50, or 3.8 percent, to close Thursday at $32.96.
Sears will need about $4 billion in new capital to avoid running out of cash in 2016, Fitch Ratings said in a September report.
McGinley, whose firm recommends selling Sears shares, estimates that the retailer could reap about $1.9 billion from the sale-leaseback transaction. He said he expects the company’s cash consumption to accelerate next year.
Sears had $326 million in cash at its domestic operations as of Nov. 1, compared with $384 million a year earlier.
Lampert said in a recording that earnings before interest, taxes, depreciation and amortization are improving and should continue to do so in the current quarter.
The quarterly sales decline was attributed in part to continued store closings and the spinoff of the Lands’ End clothing unit in April. Sales at stores open at least a year, considered a key gauge of performance, rose 0.5 percent at Kmart and declined 0.7 percent for domestic Sears stores.
Sears said its namesake stores saw strong sales of appliances and mattresses while the clothing, auto and consumer- electronics categories declined. At Kmart, clothing, outdoor and toy sales increased, but grocery, household and electronics sales fell.
The loss reported Thursday was smaller than the company forecast last month. Sears had projected it would report a third-quarter net loss of $590 million to $630 million and unchanged comparablestore sales. The company has posted only one quarterly comparable-store sales gain since Lampert merged Sears Roebuck & Co. and Kmart Holdings Corp. in 2005.
Lampert said on the call that the company is cutting costs and concentrating on drawing more sales from members with multichannel services such as “Reserve It,” which allows customers to shop for clothing online and reserve specific items to try on in stores.
“We are focused on the future of our company, leveraging our strengths, including our best members, best stores and best categories,” he said.