SHLDQ Sears Holdings Corporation (CE)

Sears Holdings Corp. on Thursday reported improved core results for its fiscal second quarter, helped in part by lower costs, but the retailer still posted a loss amid sliding sales.

Sears follows other retailers, from Kohl's Corp. to Target Corp., that have reported declining sales as shoppers have continued to shift spending online and away from brick-and-mortar stores. Meanwhile, Sears has been stumbling recently through efforts to transform itself in a bid to return to profitability, focusing on assortment, sourcing, pricing and inventory management practices—sometimes at the expense of sales.

During the quarter, Kmart same-store sales declined 3.3%, and Sears domestic same-store sales fell 7%. Chief Executive Edward S. Lampert said the company's performance remains pressured by a "challenging competitive environment."

Sears earlier this year added Bruce Berkowitz of Fairholme Capital Management to its board. Mr. Berkowitz has noted that Sears has assets it could sell, including the Kenmore, Craftsman and DieHard brand names and its home services unit. Sears on Thursday said it would continue to explore options for the brands over the next few months, and said it has received interest from potential partners.

In all for the July quarter, Sears reported a loss of $395 million, or $3.70 a share, compared with a year-earlier's profit of $208 million, or $1.84 a share, a year earlier. Excluding certain items, Sears's adjusted loss narrowed to $2.03 a share from $2.40 a share in the year-ago period.

Revenue dropped 8.8% to $5.66 billion, largely due to the drop in same-store sales and a decline in the number of stores in operation.

Gross margin fell to 22.2% in the quarter from 23.1% a year earlier, while costs and expenses fell 3%.

Shares of Sears, inactive premarket, have risen 17% in the past three months but are still down 37% from a year ago.

Write to Joshua Jamerson at joshua.jamerson@wsj.com

(END) Dow Jones Newswires

August 25, 2016 07:45 ET (11:45 GMT)

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