By Chelsey Dulaney
Sears Holdings Corp.'s loss widened in its October quarter on a
13% drop in revenue, as the one-time fixture of the U.S. retail
landscape continues to dismantle itself in an attempt to shore up
its finances.
The results, however, came in above Wall Street's
expectations.
In recent years, Eddie Lampert, Sears's chairman and chief
executive, has sought to refocus the retailers operations, spinning
off business lines like Lands' End and assets like a big stake in
Sears Canada to the company's shareholders. Sears has recently
turned to a spate of financing moves that leaned heavily on Mr.
Lampert's hedge fund in an effort to raise much-needed cash.
The efforts came as Sears worked to reassure vendors that have
been rattled by its financial performance ahead of the holiday
season, when retailers typically spend heavily securing inventory
for the key selling season. Euler Hermès Group SA, which insures
suppliers against nonpayment from retailers, told policyholders
that it would cancel coverage on Sears, and vendor finance
providers have tightened terms, vendors have said.
Sears said Thursday that it has raised $2.2 billion this year,
in part from a loan from Mr. Lampert's hedge fund and the sale of
some of the company's stake in Sears Canada. In November, Sears
said it was also weighing whether to spin off up to 300 of its 712
company-owned stores into a separate entity in which Sears
shareholders would be entitled to buy stakes.
As of Nov. 1, Sears had cash balances of $326 million, down from
$384 million in domestic-only cash balances a year earlier. Sears
said its domestic inventory was down $1.1 billion as of Nov. 1 from
a year earlier, excluding the Lands' End business, driven in part
by improved productivity and store closures.
For the quarter ended Nov. 1, Sears posted a loss of $548
million, or $5.15 a share, compared with a loss of $534 million, or
$5.03 a share a year earlier. Excluding costs of closing stores,
certain tax matters and other items, the company's adjusted
per-share loss was $2.71.
Revenue fell 12.9% to $7.21 billion.
Analysts polled by Thomson Reuters had recently expected a loss
of $3.31 a share on revenue of $6.88 billion. Sears had said last
month that its top and bottom lines in the quarter were little
changed from a year ago.
Gross margin slipped to 22.2% from 23.3% a year earlier, while
total expenses fell 12%.
Overall, same-store sales fell 0.1% at domestic stores during
the quarter. Sears said its Sears full-line domestic same-store
sales fell 0.7%, but noted they would have grown 1% excluding the
impact of consumer electronics. The company's Kmart stores posted a
0.5% uptick in same-store sales, led by strength in apparel and
outdoor living items.
Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com
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