SEARS BEMOANS AMAZON, TESLA, UBER IN Q4 LOSS
In a case of the old economy colliding with the new, Sears’ CEO on Thursday cited advantages upstarts such as Uber, Tesla Motors and Amazon hold over old-line companies like his own in announcing a deeper fourthquarter loss than a year ago.
CEO Edward Lampert invoked the newcomers’ names to raise a shopping list of complaints about perceived disadvantages confronting what was once one of the nation’s iconic retailers, from sales tax collection to a higher minimum wage, which he says makes it difficult to compete against successful online businesses.
Sears, which has both the Sears and Kmart chains, reported a loss of $580 million, or $5.44 per share, in the quarter ended Jan. 30, compared with a loss of $159 million, or $1.50 a share, in the year-ago quarter.
The adjusted loss of $1.70 a share was better than analysts had forecast, a loss of $2.62 a share, according to S&P Global Market Intelligence. Revenue came in at $7.3 billion, down from $8.1 billion in the year-ago quar- ter, marginally better than expectations. Most of the revenue decline was due to same-store sales falling, though some of it was attributed to having fewer Sears and Kmart stores. As a result, Sears shares closed 55 cents higher at $17.52 a share, up 3.2%.
But aside from the numbers, what captured attention was Lampert’s lengthy lament about the state of the traditional retail industry — and Sears’ place in it.
He cited Tesla as being among the newer companies that “rely heavily on continued financing.” By contrast, “companies viewed through a more traditional lens, like Sears Holdings, are met with skepticism even though we have an enormous asset base and a proven history of monetizing these assets and raising additional capital to fund our obligations and transformation.”
Uber, the ride-sharing service, has raised billions even as it takes losses in key markets such as China, Lampert wrote. Yet companies like his own “are held to a very different standard when it comes to profitability and regulation.”
Online merchants often don’t have to collect sales taxes, unlike Sears. And “large companies like Sears Holdings have also been met with additional burdens like higher minimum-wage costs,” he said. “With stores that are marginally profitable or unprofitable, such additional cost burdens can be the straw that breaks the camel’s back, causing stores to close and eliminate jobs,” he added.
Despite Lampert’s outcry, analysts haven’t been as sympathetic to Sears’ woes. “Much of this decline is still the result of things that Sears is getting wrong,” says Neil Saunders, CEO of retail research firm Conlumino. The long slide in sales and profit shows that the company hasn’t come “to grips with getting the business back on track. They’re almost just managing the decline the best they can.”
Sears has undergone a long slide as it has shrunk its store network.
While many retailers experienced a soft quarter, Sears’ sales declines were worse than most and follow roughly a decade of poor performance. Five years ago, Sears’ shares were trading above $60.