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Sears Posts Second-Quarter Loss as Decline in Sales Persists

Image: Sears Posts Second-Quarter Loss as Decline in Sales Persists

Thursday, 25 Aug 2016 07:34 AM

Sears Holdings Corp., the retailer run by hedge-fund manager Edward Lampert, posted a second-quarter loss as sales continued to shrink. Lampert provided the company with $300 million of additional debt financing.

Sears lost $395 million, or $3.70 a share, compared with profit of $208 million, or $1.84 a share, a year earlier, the Hoffman Estates, Illinois-based company said in a statement Thursday. The year-ago results were bolstered by the company’s $2.7 billion spinoff of properties into a real estate investment trust. Same-store sales dropped 5.2 percent.

Lampert has been selling assets and closing stores to stem the company’s continued cash burn. Sears also said in May that it would explore options for its Kenmore appliance, Craftsman tools and DieHard batteries brands. That would extend a string of transactions, including the spinoff of the Lands’ End clothing unit and the bulk of its stake in Sears Canada.

“Right now, they’re in a bit of a Catch-22 situation in that they need to reduce the inventory to generate cash, but the less inventory they have, the less likely they are to make a sale, which further reduces the cash,”  Matt McGinley, an analyst at Evercore ISI, said before the results were released.

Sears fell 6.6 percent to close at $14.70 on Wednesday before the company reported its earnings. The stock has dropped 29 percent this year, compared with an 8.3 percent gain for the Russell 2000 Consumer Discretionary Index.

Lampert has pledged to build a leaner retailer focused on selling through multiple channels. He’s invested heavily in the company’s digital and loyalty programs in a bid to cope with slowing mall traffic. But same-store sales, a common measure of performance, haven’t stabilized, declining in every quarter but one since Lampert merged Kmart with Sears in 2005. The company has closed hundreds of stores and sublet some others to retailers such as Dick’s Sporting Goods Inc.

“The stores are incredibly large for what this has become, primarily because the sales per foot are so atrociously weak,” McGinley said.

Sears has received interest from “a variety of potential partners” for Kenmore, Craftsman and DieHard as well as the Sears Home Services business, the company said. “We intend to aggressively evaluate all of the potential alternatives available to these businesses,” Sears said.

 

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Sears Holdings Corp., the retailer run by hedge-fund manager Edward Lampert, posted a second-quarter loss as sales continued to shrink. Lampert provided the company with $300 million of additional debt financing.
seras, earnings, profit, sales
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2016-34-25
Thursday, 25 Aug 2016 07:34 AM
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