Hoffman Estates, IL—Posting its 27th straight earnings decline—and its sixth straight loss—Sears Holdings Corp. today reported a wider third quarter loss as sales continued to weaken at its Sears and Kmart stores.
For the quarter ended Nov. 2, Sears lost $534 million, or $5.03 a share—more than the ever-scrutinized JCPenney reported Wednesday. That compares with a loss of $498 million, or $4.70 a share, a year ago.
Net revenue fell 7% to $8.27 billion, due in part to the fact the company has fewer Kmart and Sears stores in operation (about a $200 million decline) Total comparable store sales decreased 3.1%. “declines in consumer electronics and toys were partially offset by increases in clothing and seasonal and outdoor living products.” In Sears stores, comp sales fell 4%, caused by declines in most categories including consumer electronics, tools and home appliances.
Gross margin decreased $322 million to $1.9 million thanks to the sales declines and a gross margin rate decline. At Sears Canada’s gross margin decreased $13 million due to the impact of foreign currency exchange rates.
Beefing Up ‘Shop Your Way’
The company is shifting some emphasis from its stores to online etc. and recently agreed to sell off five urban locations worth about $400 million.
According to Edward Lampert, the billionaire hedge fund manager, largest shareholder and chairman/ceo, “We are proactively transforming our business to a member-centric integrated retailer leveraging Shop Your Way (member rewards program) to benefit from the changing retail landscape. We are transitioning from a business that has historically focused on running a store network into a business that provides and delivers value by serving its members in the manner most convenient for them: whether in store, in home or through digital devices.”
Lampert said the transformation will be adding addition services, developing digital and social relationships with members, using data and analytics to make targeted offers and “decisions delivered in real time and expanding our reach through Marketplace and delivery options…We have been investing hundreds of millions of dollars annually in our transformation and will continue to invest in the future of the company.”
But he said that Sears is making progress toward building its Shop Your Way program, which now accounts for 70 percent of sales, up from 65 percent in the second quarter. He noted that the company is using data to make targeted offers to its Shop Your Way customers. Online, sales have been up 17 percent so far this fiscal year.
“The focus is less on selling products and just running stores,” he said. “But serving members first.”