Online Sales Growth Buoys Slow Sears, Kmart Store Sales In Q2

Sears Holdings Corporation reported a net loss of $194 million, $1.83 loss per diluted share, for the second quarter ended August 3, 2013, compared to $132 million, or $1.25 loss per diluted share, in the prior year quarter. Kmart comparable store sales declined 2.1%, Sears Domestic declined 0.8% and Sears Canada declined 2.5%. Online business on and, however, grew 20% over the prior year second quarter. 

“We made meaningful progress this quarter in our transformation to a member-centric company. Shop Your Way members represented over 65% of our sales and they redeemed rewards points at a significantly higher rate than last year. While the increase in Shop Your Way promotional activity and member redemptions resulted in a meaningful increase in our costs, it demonstrates that our members are deepening their engagement with our program which will allow us to further accelerate our transformation,” commented Eddie Lampert, Sears Holdings’ chairman and CEO. “At the same time, we recognize how important it is to improve the profitability of our company and I am disappointed that we did not deliver a better result.”

Revenues decreased $596 million, to $8.9 billion, as compared to revenues of $9.5 billion for the quarter ended July 28, 2012, “the effect of having fewer Kmart and Sears full-line stores in operation, which accounted for approximately $210 million of the decline,” the company said, along with decreases due to foreign exchange rates and lower domestic comparable store sales. Revenues were also impacted by approximately $195 million attributable to the separation of SHO (Sears Hometown and Outlet Stores, Inc.), which occurred in the third quarter of 2012. The company did however record revenues from SHO of approximately $450 million, primarily related to merchandise sold to SHO for resale, but the prior year quarter included revenues of approximately $645 million related to SHO merchandise sales.

For the quarter, domestic comparable store sales declined 1.5%, comprised of decreases of 2.1% at Kmart and 0.8% at Sears Domestic.