Sears 1Q loss widens, looking at options for Kenmore, others
NEW YORK (AP) - Sears' fiscal first-quarter loss widened as it suffered another sales drop at its Kmart and namesake stores.
The Hoffman Estates-based retailer also announced that it's looking at options for its prized Kenmore, Craftsman and DieHard and Sears Home Services businesses, including possible partnerships or deals that could expand distribution of its brands and service offerings.
The chain said that it believes it can achieve significant growth in the Kenmore, Craftsman and DieHard brands by further expanding their presence outside of Sears and Kmart.
Sears' shares rose in early morning trading on the news.
Iconic department stores such as Macy's, Kohl's and J.C. Penney suffered sales declines in the latest quarter as they wrestle with changes in shopping preferences. Americans are shifting purchases online and spending more on experiences like eating out rather than buying a new outfit. And when they do spend on clothing, it's at places like T.J. Maxx. But Sears fared far worse, and analysts put much of the blame on the company itself.
Sears Holdings Corp. has struggled for years with weakening sales, unable to keep up with companies that sell appliances, like Home Depot, or general merchandise, like Wal-Mart, or everything, as is the case with Amazon.com. Its big albatross has been its stores, which largely remain outdated and grungy.
Moreover, even in appliances, where Sears has long had an established presence, it saw declines, while other retailers enjoyed increases as they benefit from an improving home market. That, says Neil Saunders, CEO of Conlumino, a research firm, highlights its main issue: "It has fallen out of favor with American shoppers who continue to abandon the chain at a fairly alarming rate."
Sears Chairman and CEO Edward Lampert has pledged to investors that a turnaround is in store, but it has yet to happen. The company has been selling assets to raise cash and accelerating store closures. In April, the company said would close another 78 stores - 68 Kmart units and 10 Sears stores - as it looks to restore profitability. That accounts for 5 percent of its fleet, which is nearly 1,700 stores. In 2011, it operated 4,000 stores.
Sears is also shifting away from its focus on running a store network into a member-focused business. Loyal shoppers receive incentives to buy. But those moves haven't gained much traction with shoppers.
For the period ended April 30, Sears lost $471 million, or $4.41 per share. A year earlier, the company lost $303 million, or $2.85 per share.
Removing certain items, the chain lost $1.86 per share. Revenue, meanwhile, declined to $5.39 billion from $5.88 billion.
Sales at Kmart stores in the U.S. that have been open for at least a year fell 5 percent. At Sears' locations, the figure dropped 7.1 percent. The drop was fueled by declines in home appliances, clothing, consumer electronics, footwear and Sears Auto Centers. The metric is a key gauge of a retailer's health because it excludes results from locations recently opened or closed.
Lampert said in a statement Thursday that clothing sales continue to be hurt by heavy promotions from competitors.
Sears also announced that Chief Financial Officer Robert Schriesheim will be leaving the company to focus on other business interests and pursue other career opportunities. Schriesheim has agreed to stay with the company until a replacement is found. He will also continue as an adviser to Sears through Jan. 31, 2017.
Sears' shares rose more than 10 percent, or $1.37 to $13.89 per share in early morning trading Thursday.