Although the company touted an improvement in comparable store sales trends, Sears Holdings continued to post comp declines in the second quarter despite substantial under-performing store closures, even as company losses increased substantially.
In a blog posted in concert with second quarter results, Sears Holdings chairman and CEO Edward Lampert struck a cautionary note in detailing how market changes, pension plan obligations and liquidity requirements have constrained the company’s efforts to regain profitability.
Lampert said, “We have worked hard to make the best possible decisions for the company given the options available to it and the variety of constraints it has faced. We continue to believe that Sears can successfully evolve into a smaller but profitable company focused on our [Shop Your Way] membership program and our integrated retail capabilities, and with a large enough store and online platform from which to grow. This can only happen with the cooperation of our various stakeholders and with the monetization of further assets that can be reinvigorated independently and without the financial constraints of Sears Holdings.”
Net loss attributable to Sears Holdings shareholders for the quarter was $508 million, or $4.68 per diluted share, versus a net loss of $250 million, or $2.33 per diluted share, in the year-before period.
Comparable sales declined 3.9% overall year over year reflecting a 3.7% decrease at Kmart and a 4% decrease at Sears stores. Total revenues were $3.18 billion versus $4.28 billion in the year-previous quarter while merchandise sales were $2.43 billion versus $3.41 billion in the year-prior period.
As the second quarter ended on August 4, Sears Holdings operated 866 namesake and Kmart stores. In addition, the company continued efforts to align its finances to maximize liquidity and flexibility, and identified 46 unprofitable stores it plans to close in the fourth quarter. The company also continued to explore asset sales including that of the Kenmore brand.
In announcing the financial results, Lampert said, “While we are encouraged by the improved comparable stores sales trend we experienced in the second quarter, and the positive comparable store sales of 3% and 2.5% achieved in the months of July and August, respectively, we have yet to achieve our goal of returning the company to profitability. We continue to close unprofitable stores, and we are hopeful that we can stabilize our store base at a meaningful level in the near future. Our goal is to right size our store footprint to a solid base from which we can operate and grow profitably, while leveraging our online and Shop Your Way platforms. As we enter the second half of 2018, we remain focused on identifying additional opportunities to streamline operations and reduce operating expenses while staying focused on our best members, best categories and best stores. We have a responsibility to explore opportunities to unlock the full potential of our assets for our shareholders, including third-party partnerships or the sale of our businesses. We believe these initiatives will help us to strengthen the company, improve financial performance, and better position us for the future.”