Edward S. Lampert didn’t try to blame bad weather, delayed tax refunds or any other consumer bogeyman for Sears Holding Corp.’s $279 million first-quarter loss.
This story first appeared in the May 24, 2013 issue of WWD. Subscribe Today.
Lampert, during his first conference call with Wall Street as chief executive officer as well as chairman, said the Sears results were “not acceptable.”
Investors agreed and pushed shares of the firm down 11.9 percent to $51.26 in after-hours trading.
“A company of our size and with our assets should be generating a significant profit,” said the hedge fund operator, who merged Sears and Kmart to form the more-than-2,500-door retailer. “During the first quarter of 2013, many of our competitors have noted certain macro factors that have impacted our industry, their businesses and our business: colder weather in parts of the country, delayed tax refunds, etc….I do not subscribe to the view that the macro factors are the sole reason for our poor performance. They have an impact, but even with that impact, we should be doing a lot better than we are.”
Lampert noted how technology and consumer buying habits are challenging retailers and said the company must evolve to keep up. Sears is focusing on its Shop Your Way membership program and working to better use technology to connect with shoppers.
The net losses for the quarter translated into $2.63 a diluted share and compared with earnings of $189 million, or $1.78, a year ago, when the company saw a significant gain from real estate sales.
Adjusted losses of $1.29 a share were more than twice as steep as the 60 cents consensus estimate, calculated off of the two analysts who hazarded a guess on results, according to Yahoo Finance.
Revenues for the three months ended May 4 fell 8.8 percent to $8.45 billion from $9.27 billion. Comparable-store sales fell 4.6 percent at the Kmart division and declined 2.4 percent at Sears’ U.S. stores.
Sears cut expenses by $46 million in the quarter and plans to trim a total of $200 million this year. It also intends to reduce its peak inventory by $500 million and expects to raise at least $500 million, possibly by selling its protection agreement business, which helps protect consumers from appliance breakdowns.
Lampert said he spent his first 100 days as ceo meeting with the company’s leaders “asking questions and listening to their opinions, ideas and concerns.”
“It will take a bit of time, but I am committed to having a leadership team which is aligned, accountable and that understands what we need to do to transform this company,” he said. “And we intend to transform while producing results, not using transformation as an excuse for why results are not satisfactory.”