As Sears Holdings posted a wider net loss and continuing comp declines in the first quarter, the company said it was closing more stores, weighing options for its Kenmore, Craftsman and DieHard brands and announced the impending departure of its chief financial officer.
For the first quarter ended April 30, Sears Holdings reported a company net loss of $471 million, or $4.41 per diluted share, versus a company net loss of $303 million, or $2.85 per diluted share, for the prior-year period. Adjusted for one-time items, the net loss was $199 million, or $1.86 per diluted share, in the quarter versus $213 million, or $2 per diluted share, in the year-earlier period.
The adjusted loss beat a MarketBeat published analyst average estimate of $3.20.
Comparable store sales at Kmart declined 5%, while comps at Sears stores slid 7.1%.
Kmart comp decreases arose from declines in consumer electronics, grocery and household, pharmacy, drug store and home category sales activity. Decreases in home appliance, apparel, consumer electronics, footwear and Sears Auto Centers sales drove comps at Sears stores lower, the company stated.
Net sales were $5.39 billion versus $5.88 billion in the 2015 quarter.
“Our Sears domestic and Kmart apparel businesses continue to be negatively impacted by a heavily promotional competitive environment,” said Edward Lampert, Sears Holdings’ chairman and CEO. “We continue to focus on improving the overall performance of these businesses through changes to our assortment, sourcing, pricing and inventory management practices. We remain focused on restoring Sears Holdings to profitability by concentrating on our best stores, our best members and our best categories through innovative solutions leveraging our Shop Your Way membership program and our integrated retail offerings.”
In a conference call, Robert Schriesheim, Sears evp and CFO, said the company, as part of its cost cutting efforts, had accelerated the closing of 50 unprofitable stores in the current fiscal year and would shutter an additional 117 locations before year’s end. Additionally, the company is exploring alternatives for Sears Home Services, an operation that includes protection agreements, parts direct, and delivery/installation/repair businesses. As connected living becomes more common, he noted, Sears believes that the home services could benefit significantly. Sears Holdings has retained Citigroup Global Markets and LionTree Advisors to assist it in the alternatives review, Schriesheim stated.
As part of the evaluation and to drive growth, Sears said it is exploring alternative ways to further develop the Kenmore, Craftsman and DieHard brands. “We believe that we can realize significant growth by further expanding the presence of these brands outside of Sears and Kmart,” the company stated.
Sears also said that CFO Schriesheim will be departing from his position with the company to focus on his other business interests and pursue other career opportunities. To ensure a transition, Schriesheim has agreed to continue in his current role until the company has identified his replacement. He will continue to remain an advisor to the company through January 31, 2017.