Tags: holiday | sales | Sears | loss

Sears Has $358 Million Quarterly Loss as Holiday Sales Fall

Thursday, 27 Feb 2014 09:46 AM

Sears Holdings Corp., the retailer run by hedge fund manager Edward Lampert, posted a $358 million fourth-quarter loss as investments in online operations and a rewards program failed to boost holiday sales.

The net loss in the quarter ended Feb. 1 narrowed to $3.37 a share from $489 million, or $4.61 a share, a year earlier, the Hoffman Estates, Illinois-based company said today in a statement. Revenue fell 14 percent to $10.6 billion.

Lampert, who took over as chief executive officer a year ago, has invested in the company’s digital capacity and its Shop Your Way rewards program to reverse a sales decline that has now stretched for 28 straight quarters. He’s sought to shrink the company’s store base and last month announced the closing of its money-losing downtown Chicago location, saying retailers today need less square footage.

“The cash burn from operations will likely be worse,” unless Sears further reduces inventory through store closings or cuts, Matt McGinley, a managing director at Institutional Strategy & Investments in New York, said in a telephone interview yesterday.

Sears rose 3.6 percent to $40.40 yesterday in New York.

Lampert, who controls about 48 percent of Sears’ shares, said in his annual letter to investors that the company’s digital investments may pay off this year as customers take advantage of services such as drive-up merchandise pickup.

Retail Industry

“The entire retail industry is headed to where we already are,” he wrote. He also cited a “tough-to-terrible” holiday season for both Sears and its peers.

The loss was at the wider end of the range of $250 million to $360 million that Sears forecast last month. Sales at stores open at least a year fell 7.8 percent at U.S. Sears locations and 5.1 percent at Kmart for a companywide 6.4 percent decline.

Sears said it cut peak inventory by $620 million for the year, more than its $500 million goal, and reduced expenses by $200 million.

As operations have consumed cash, Lampert has replenished Sears’ coffers through asset sales, including $1 billion in real estate proceeds last year. Cash at year-end was $1 billion, counting domestic amounts and at Sears Canada, compared with $618 million the previous year, the company said.

Actions such as strategic alternatives for the auto-center business and increases in the value of the Sears Canada investment will provide more than $1 billion in cash proceeds this year, Sears said.

Sears said today the spinoff of its Lands’ End business may happen in the first quarter.

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Sears Holdings Corp., the retailer run by hedge fund manager Edward Lampert, posted a $358 million fourth-quarter loss as investments in online operations and a rewards program failed to boost holiday sales.
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2014-46-27
Thursday, 27 Feb 2014 09:46 AM
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