Sears Holdings’ Lampert: ‘Q2 Earnings Unacceptable’

Sears Holdings Corporation has announced financial results for its second quarter ended August 2, 2014. Net loss attributable to Holdings’ shareholders was $573 million ($5.39 loss per diluted share) for the second quarter of 2014, compared to $194 million ($1.83 loss per diluted share) for the prior year second quarter.

“We have continued to show progress in our transformation, as demonstrated by our year-over-year increase in online and multi-channel sales, and with our member sales now representing 73% of eligible sales,” said Edward Lampert, Sears Holdings’ chairman and CEO.

“However, our second quarter earnings are unacceptable and we are taking steps to address our performance on several levels,” added Lampert. “This includes reducing costs as we evolve our business model, investing in our Shop Your Way and Integrated Retail customer initiatives, rationalizing our physical footprint and improving pricing and promotions.

“As we progress with our transformation by investing in new programs and platforms, we continue to bear the costs of two promotional models, which adversely impacts margins. There is more work to be done to get results where we expect them to be,” he concluded.

Sears Holdings reported that Sears full-line stores experienced comparable store sales growth of 0.1% for the quarter as compared to a decline of 0.8% in the second quarter of last year, despite the continuing impact of consumer electronics industry trends. Excluding the impact of consumer electronics, comparable store sales growth would have been 1.6%.

Kmart comparable stores sales were down 1.7% for the quarter as compared to a 2.1% decline last year, also despite the continuing impact of consumer electronics industry trends, as well as the impact of its grocery and household goods business. Excluding the impact of both, comparable store sales would have declined 1.0%.

Among other highlights: Sales to Shop Your Way members in Sears full-line and Kmart stores increased to 73% of eligible sales, up from 71% during the second quarter last year; and online and multi-channel sales grew 18% over the prior year second quarter and 22% over the prior year first half.

Sears also reported that it is continuing to evaluate its Sears Auto Center business, as well as its 51% interest in Sears Canada, including a potential sale of its interest of Sears Canada as a whole.