Sears Slides In Q4, Weighs New Spending And Store Cuts

In its update on the fourth quarter, Sears Holdings Corp. said it expects comparable store sales at its namesake stores to decline 6.9% and those for Kmart to decrease 7.2% for a company total of negative 7.1%. For the full 2015 fiscal year, the company anticipates Sears store comps to slip 11.1% and those for Kmart to slip 7.3% for a company total of negative 9.2%.

The company stated that it expects total revenues of $7.3 billion for the fourth quarter and $25.1 billion for the full-year. In the last fiscal year, fourth quarter sales were $8.1 billion and full year sales were $31.2 billion. The company anticipates fourth quarter adjusted EBITDA, excluding results from its Seritage REIT and joint venture rents, will range between a loss of $100 million and a loss of $50 million versus adjusted EBITDA of $125 million in the fourth quarter of 2014.

The company maintained that it entered the holiday selling season with key product offerings and promotions intended to build engagement particularly with members of its Shop Your Way loyalty program and provide them with the best experience possible. However, the company continued, the holiday selling season proved to be challenging with historically warm weather and intense competition pressuring margins and driving comparable store sales declines particularly in apparel and related softlines businesses.

With its recent performance in mind, Sears asserted that it is taking further actions to accelerate its operational transformation, which is focused on the Shop Your Way loyalty program and integrated retail offerings.

Sears added that it would accelerate the closing of unprofitable stores, including, but not limited to, the approximately 50 that it recently announced would be shuttering over the next few months. The company also intends to continue evaluating and optimizing cost structure including store-level marketing expenditures and overall staffing levels, and will be taking action to reduce fixed costs as well as to improve inventory management and gross margin realization, Sears related.