SHLDQ Sears Holdings Corporation (CE)

Sears Holdings Corp.'s revenue slid 22% in its second quarter, though profitability improved at its domestic stores and Kmart division.

Sears had provided guidance for the quarter in early August, saying that $2.7 billion in proceeds from the spinoff of some of its real estate would help drive its first quarterly profit in three years.

Sears has been struggling to transform itself fast enough to counter the steep declines in sales. It has been investing in new technologies and services to better equip it for the digital age, but those strategies have yet to result in a meaningful sales increase or to erase a string of losses.

Earlier this year, the retailer spun off 235 properties into a real-estate investment trust it created called Seritage Growth Properties , and it also created joint ventures that hold additional properties with three mall owners.

In all, for the period ended Aug. 1, Sears swung to a profit of $208 million, or $1.84 a share, compared with a loss of $573 million, or $5.39 a share, a year earlier.

That was slightly above the $155 million to $205 million in earnings Sears had forecast earlier this month.

Excluding the gain from its real estate spinoff, the company's per-share loss narrowed to $2.40 a share from a loss of $2.76 a share a year earlier.

Gross margin improved to 23.1% from 21.7% a year ago, with Kmart improving by 0.8 percentage points and Sears' domestic stores improving by 2.1 percentage points.

In a news release, Chief Executive Eddie Lampert said Sears is becoming more efficient with its promotions.

But the retailer also revealed deep drops in sales despite its attempts to shore up its finances.

Sears said sales excluding newly opened and closed stores fell 7.3% at Kmart, an increase from the 6.9% decline Sears had reported earlier this month. At Sears domestic stores, comparable stores fell 14%, compared with the 13.9% the retailer reported earlier this month.

Total revenue fell to $6.21 billion from $8.01 billion a year ago.

Write to Chelsey Dulaney at Chelsey.Dulaney@wsj.com

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(END) Dow Jones Newswires

August 20, 2015 07:25 ET (11:25 GMT)

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