May 22, 2014
Sears loss widens as discounts fail to arrest fall in sales
May 22, 2014
Sears posted a bigger loss for the first quarter as the struggling retailer failed to arrest a fall in sales despite offering heavy discounts to woo shoppers.
Shares of the company, which operates Sears department stores and the Kmart discount chain, fell 7 percent in premarket trading.
Sears, controlled by hedge fund billionaire Eddie Lampert, has been shedding assets and closing stores as it battles the operating losses and weak sales that have plagued the company since 2005, when the two chains were merged.
The company said last week it was exploring a sale of its 51 percent stake in Sears Canada.
Sears said on Thursday that a potential stake sale could raise about $730 million in cash at current market value.
On Wednesday, Sears Canada reported its steepest fall in quarterly sales in almost five years.
Sears said it would close 80 stores or more in the year ending January. The retailer operated 1,980 Sears and Kmart stores in the United States as of February.
The company's U.S. comparable store sales fell 1 percent in the quarter ended May 3.
Comparable store sales declined 2.2 percent at Kmart stores in the United States, but rose 0.2 percent at Sears stores due to higher demand for home appliances and home products.
The company said its gross margin fell to 23.2 percent from 25.5 percent.
Net loss attributable to shareholders widened to $402 million, or $3.79 per share, from $279 million, or $2.63 per share, a year earlier.
Revenue declined 6.8 percent to $7.88 billion, but came higher than the average analyst estimate of $7.71 billion, according to Thomson Reuters I/B/E/S.
Sears has been trying to move away from relying on stores for revenue to focus on membership through its Shop Your Way program, which integrates online shopping.
The company said that sales to Shop Your Way members increased to 74 percent of eligible sales from 68 percent a year earlier.
Sears shares were trading at $33.90 before the bell. The stock has fallen about 8 percent this year to Wednesday's close.
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