Ouch. Earlier this week, Sears Holdings Corporations reported a net loss of $748 million ($6.99loss per diluted share) for the third quarter of 2016, compared to a net loss of $454 million ($4.26 loss per diluted share) for the prior year third quarter. And the numbers kept getting worse from there.
Other losses for the quarter include a 12.5% dive in revenue, to $5 billion, with losses widening to $748 million from $454 million in the period last year. Same-store sales fell 7.4%, including a 10% decrease at Sears stores and a 4.4% decrease at Kmart stores, while Sears’ cash and equivalents fell 12% to $258 million.
(The Company operates Sears, Roebuck and Co. and Kmart Corporation, with full-line and specialty retail stores across the United States.)
The report was enough for analysts to basically declare the company dead in the water, unable to make a turnaround at this point. Neil Saunders, the CEO of the retail consulting firm Conlumino, said, “the funds raised are not being used to develop of growth the firm — they are being used to prop up an ailing and failed business.”
Earlier this fall, the company was downgraded in Moody’s liquidity rating, who at that time said they do not believe Sears has enough money to stay in business. On top of that, several suppliers have seized selling merchandise to the company, citing concerns over payments.
Still, executives insisted that a bankruptcy (which many see as inevitable) will not happen and pointed to the company’s valuable portfolio of assets to carry it through. They also noted the closure of an additional 64 Kmart stores this month to help ease future losses; the company has already shuttered 80 Sears and Kmart stores this past summer.
Edward S. Lampert, Holdings’ Chairman and Chief Executive Officer, said in a statement, “We remain fully committed to restoring profitability to our Company and are taking actions such as reducing unprofitable stores, reducing space in stores we continue to operate (including through the Seritage lease arrangement), reducing investments in underperforming categories and improving gross margin performance and managing expenses relative to sales in key categories. While many observers have acknowledged the significant asset base of our Company, we understand the concerns related to our operating performance and are committed to transforming our Company through our Shop Your Way membership program and our Integrated Retail investments. At the same time, we will continue to explore options to recognize the inherent asset value in a manner that complements our transformation.”
The report also highlighted the quarter’s marketing initiatives, like a partnership with Uber Technologies and improvements and expansion in its Home Services business.
Still, it’s hard to put a positive spin on the results and as sales continue to slip, a bankruptcy and eventual liquidation seems likely.