Sears Revenue Declines, Eyes Deals for Key Brands
May 26 2016 - 7:50AM
Dow Jones News
Sears Holdings Corp. reported narrow improvement in its bottom
line in the first quarter as the retailer trimmed expenses, though
revenue continued to slide and margins contracted.
The retailer also said its board will explore increasing the
availability of Kenmore, Craftsman and DieHard wares outside of
Sears and Kmart stores, saying it could "realize significant
growth." It also said its home services business "has greater
potential than what we have delivered in the past." Sears said it
would evaluate "potential partnerships or other transactions" to
expand distribution and service offerings for both businesses.
In the previous quarter, Sears said it added Bruce Berkowitz of
Fairholme Capital Management—Sears's second-biggest shareholder
behind Mr. Lampert with a 24.9% stake—to the company's board. Mr.
Berkowitz has noted that Sears has assets it could divest,
including the Kenmore, Craftsman and DieHard brand names and its
home services unit.
Sears follows a slew of retailers reporting a disappointing
start to the year. Chains from J.C. Penney Co. to Target Corp.
posted sluggish sales as consumers cut back spending, especially at
brick-and-mortar stores.
Meanwhile, Sears has been stumbling through efforts to transform
itself by investing in new technologies and services to better
equip it for the digital age. It also has focused on returning to
profitability—focusing on assortment, sourcing, pricing and
inventory management practices—sometimes at the expense of
sales.
During the quarter, same-store sales dropped off 6.1%. Kmart
same-store sales declined 5%, and Sears domestic same-store sales
fell 7.1%.
Chief Executive Edward Lampert said operating performance
remains "well below our goals," but pointed to improved earnings
before interest, tax, depreciation and amortization in the quarter,
helped by reductions in overall expenses.
He said Sears domestic and Kmart apparel businesses continue to
be negatively impacted by a "heavily promotional competitive
environment."
In all for the quarter ended April 30, Sears reported a loss of
$471 million, or $4.41 a share, compared with a loss of $303
million, or $2.85 a share, a year earlier. Excluding certain items,
Sears's adjusted loss shrunk to $1.86 a share from $2 a share.
Revenue dropped 8.3% to $5.39 billion, mostly owing to the
same-store sales decrease and having fewer Kmart and Sears
full-line stores in operation. $268 million of the year-over-year
revenue decline was attributable to comparable-store declines while
$149 million of the decline was due to having fewer stores.
During the quarter, gross margin fell to 21.8% from 25.8%, on
the decline in sales. Overhead costs, however, decreased as a
percentage of revenue to 27.9% from 28.6%.
Shares of Sears, inactive premarket, have lost 71% of their
value over the past year.
Write to Anne Steele at Anne.Steele@wsj.com
(END) Dow Jones Newswires
May 26, 2016 07:35 ET (11:35 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
Target (NYSE:TGT)
Historical Stock Chart
From Mar 2024 to Apr 2024
Target (NYSE:TGT)
Historical Stock Chart
From Apr 2023 to Apr 2024