Sears Holdings Corp. racked up $146 million in third-quarter losses, but plans to keep repurchasing shares and consider acquisitions even as it continues to close stores.
Sears also added to its management team Tuesday, tapping Nick Coe to be senior vice president of the company and president of Lands’ End and Scott Freidheim as executive vice president of operating and support businesses.
Losses for the three months ended Nov. 1 translated into $1.16 a diluted share, more than twice the 49 cent deficit that Wall Street analysts were predicting, according to Yahoo Finance. The loss was driven by weakness at the firm’s Kmart and U.S. Sears stores, as well as a $61 million aftertax charge related to 14 store closures and $46 million in noncash asset impairment charges. Year-ago earnings tallied $4 million, or 3 cents a share.
Sales dropped 8.3 percent to $10.66 billion from $11.62 billion. Same-store sales fell 10.6 percent at Sears’ U.S. stores and 7 percent at Kmart units.
The Hoffman Estates, Ill.-based firm is led by chairman Edward Lampert, the hedge fund manager who masterminded the Sears-Kmart combination and might be looking to make more deals.
“With significant assets and cash flow, we believe Sears Holdings has the flexibility to continue to invest in our business, repay debt and consider acquisition opportunities, as well,” said W. Bruce Johnson, Sears Holdings’ interim president and chief executive officer.
The Sears U.S. division weighed in with operating losses of $183 million for the quarter, down from year-ago earnings of $36 million, as sales fell 9.6 percent to $5.83 billion. At the Kmart division, operating losses widened to $103 million from $59 million as sales fell 7.1 percent to $3.53 billion.
The company said it would close another eight stores and take a $21 million pretax charge in the current quarter. Sears operates 2,300 full-line stores and 1,200 specialty stores in the U.S., and another 380 doors in Canada.
Sears’ board also authorized up to an additional $500 million in share repurchases on top of the $72 million left under a previous repurchase plan.
Shares of Sears closed up $4.25, or 13.4 percent, to $36.09, well below the issue’s 52-week high of $116.79. Sears apparently sees that price as a bargain and said in a filing with the Securities and Exchange Commission that it would consider using its $4 billion credit agreement to repurchase shares.
Jason Asaeda, retail analyst at Standard & Poor’s Equity Research, maintained his “sell” rating on the stock, noting that sales fell $100 million short of his forecast.
“We view [Sears Holdings’] more aggressive closure of underperforming stores as a positive,” Asaeda said. “But we see ongoing challenges in merchandising and marketing.”
Discussing the additions of Coe and Freidheim, Johnson said: “Despite the tough market conditions, we plan to continue to add transformational leaders to our organization. We remain committed to investing in our future by hiring talented leaders.”
Coe brings 25 years of experience to Lands’ End. Most recently, he was senior vice president of merchandise and interim head of design for Gap Inc.’s Banana Republic unit. Prior to that, he spent 19 years in various positions at Levi Strauss & Co.
Freidheim comes to Sears from Lehman Brothers, where he worked for 17 years, most recently as executive vice president and chief administrative officer.
The credit crunch that nearly brought the banking sector to a halt this fall and led to the demise of Lehman Bros. also has touched Sears directly, albeit in a modest way. The retailer’s $4 billion revolving credit agreement comes from a consortium of banks that includes an affiliate of Lehman Bros., which was responsible for $207 million of the total. The Lehman unit hasn’t funded its share of the borrowing since the bank filed for bankruptcy in September, according to Sears’ SEC filing.
@chanel and @pharrell dropped what’s being dubbed as the world’s most exclusive sneakers yesterday. The Adidas Originals NMD Hu, which Williams designed in collaboration with Chanel and @adidasoriginals, has a waiting list of over 120K people who pre-registered online at chanelatcolette.fr –– and only 500 pairs are on sale. The singer predicted the resale value of the shoes could reach $40K. Read the full interview on WWD.com. Link in bio. #wwdfashion (📷: Dominique Maître)
@imanshumpert is diving deeper into his creative endeavors and relaunching his clothing line, Post 90s, and is helping to raise money for the hurricane victims in St. Maarten with a jersey he’s designed with his brother. The Cleveland Cavaliers player talked to WWD about kneeling during the national anthem, working with fashion brands and how he wants to be more than an @nba player. Read the interview on WWD.com #wwdfashion (📷: George Chinese)
Not only does #TheProfit return to CNBC tonight, but @marcuslemonis has launched @shopmarcus, a new shopping and lifestyle retail experience in Aspen and Chicago, with more locations to come. The retail stores offer in-store stylists and a variety of contemporary womenswear selections.
“It’s life, I’m going to face it,” @mingxi11 sighed. “I fell, but you know, I think the most important thing is that I get back up. I had the love, the help from my sister — the girl next to me Gizele [Oliveira] — she’s so nice. When I went backstage everybody was trying to comfort me like ‘Oh Ming, it’s OK.’ I’m really, really touched. I think it’s them who gave me the courage to go back on stage for the finale,” Xi told WWD of her fall at the @victoriassecret fashion show. (📷: David Fisher) #wwdfashion #vsfashionshow #victoriassecret
@louisvuitton tapped @therealpeterlindbergh for its latest city-centric photo book, which is part of a series called Fashion Eye. The primarily black and white book captures the spirit of Berlin in 57 images shot between 1989 and 2019. “Berlin is an inspiration for me, more than a city. I mean @millajovovich is simply Berlin!” said Lindbergh. #wwdfashion
“You know, I think audiences expect a certain performance so I have to deliver to them what they’re expecting to a certain degree. But I’m also a different actor and a different person, I have my own spin on the character,” says @noahegalvin of his takeover of the leading role in “Dear Evan Hansen” following the departure of @bensplatt, who originated the role. Read WWD’s interview with the 23-year-old actor on WWD.com #wwdeye (📷: @jilliansollazzo)
For pre-fall 2018, @etro created richly-colored wonderland, using tapestries, textiles and wallpapers from the Eastern world at large. The line featured floral and graphic prints and jacquard motifs, like this two-piece look featured here. #wwdfashion (📷: Giovanna Pavesi)
@kith is moving into children’s. The men’s and women’s streetwear brand has launched Kidset, a Kith kids line located in New York at 64 Bleecker Street. The line includes mini versions of staple Kith pieces like the Astor bomber jacket and the Kith box logo sweatshirts, along with a wall that can display up to 120 pairs of shoes from @adidas, @newbalance, @timberland and more. #wwdfashion
“I just wanted to create this fully rounded character, but I do think what excited me most was just the opportunity to give a group of people representation that I feel needs it. I like to do characters in projects that stand for something and Karolina definitely does, so that was really exciting to me,” @ginnygardner says of her new role in @hulu’s “The Runaways.” Gardner plays Karolina Dean, a queer superhero, which is a rarity for @marvel. Read more about Gardner’s character on WWD.com #wwdeye (📷: @dandoperalski)