Sears 2Q loss widens as sales weaken at stores
THE ASSOCIATED PRESS August 22, 2013 7:56AM
HOFFMAN ESTATES — Sears’ second-quarter loss widened as the number of stores in operation declined and it dealt with lingering effects from its spinoff of the Hometown and Outlet brand.
A series of retailers including Wal-Mart Stores Inc. and Macy’s Inc. have reported disappointing quarterly results this month and have issued bleaker outlooks as shoppers grapple with an uncertain economy. Americans absorbed a 2 percentage-point increase in the Social Security payroll tax this year as well. That means take-home pay for a household earning $50,000 a year has been sliced by $1,000.
Hedge fund billionaire Edward Lampert, who controls the company and took over as CEO at the start of the year, has been pushing hard to compete with online retailers like Amazon.com, and that was one bright spot for the company this quarter.
Online sales rose 20 percent at sears.com and kmart.com.
Still, losses are growing and in trading before the opening bell, company shares fell 4 percent.
For the period ended Aug. 3, Sears Holdings Corp. lost $194 million, or $1.83 per share. That compares with a loss of $132 million, or $1.25 per share, a year earlier.
Excluding one-time charges, it lost $1.46 per share.
Revenue for the company, based in for the Hoffman Estates, Ill., declined 6 percent to $8.87 billion from $9.47 billion, mostly due to store closings.
Sears Hometown and Outlet Stores Inc. shares began trading publicly last October. The company mostly sells home appliances, hardware, tools and lawn and garden equipment. Sears said Thursday that revenue from Hometown and Outlet was about $450 million in the second quarter, down from revenue of approximately $645 million a year earlier.
Revenue at Kmart stores open at least a year fell 2.1 percent. The figure dropped 2.5 percent for Sears stores in Canada open at least a year and dipped 0.8 percent for the Sears locations in the U.S.
This metric is a key gauge of a retailer’s health because it excludes results from stores recently opened or closed.
Sears’ middle-income shoppers have been hit hard by a slowly recovering economy, but critics have long said the company hasn’t done enough to invest in its stores to compete with Wal-Mart, Target Corp. and others. The company has posted six straight years of declining sales at stores open at least a year.
Sears has said that it has been making changes in stores, such as giving iPads and iPod Touch devices to sales staff to research products and help customers on the sales floor.
The company is also focusing on a loyalty program, called “Shop Your Way.” Sears said members of the program made up more than 65 percent of revenue at its U.S. Sears and Kmart locations during the quarter, up from more than 55 percent in the prior-year period.
Lampert said in a statement on Thursday that the program is part of its planned transformation into a member focused company. While Lampert said that shoppers redeemed rewards points at a much higher rate than a year ago and increased its costs, he believes that members are getting more involved with the program, which will allow Sears to speed up its transformation further.
Lampert took on the CEO role in January. He succeeded Louis D’Ambrosio, who had been CEO since February 2011 and who left the company for family reasons. Lampert engineered the combination of Sears and Kmart in 2005, about two years after he helped bring Kmart out of bankruptcy.
The company, which operates nearly 2,500 stores in the U.S. and Canada, is considered a bellwether of consumer spending for low- to middle-income shoppers.