Sears Holdings Corp. widened its adjusted first-quarter loss, but still managed to beat Wall Street’s consensus estimates for both the loss per diluted share and revenues for the period.
For the three months ended April 29, Sears said it posted net income of $244 million, or $2.28 a diluted share, compared with a net loss of $471 million, or $4.41, a year ago. Adjusted for certain items, Sears posted a net loss of $230 million in the quarter, or $2.15, compared with an adjusted net loss of $199 million, or $1.86, a year ago. The loss at $2.15 – although wider than the year-ago’s adjusted loss – was still 90 cents better than analysts’ expectations of a loss of $3.05 a diluted share for the current quarter.
Revenues for the quarter fell 20.3 percent to $4.30 billion from $5.39 billion. While the decline was due mostly to fewer stores, the company also saw declines in comparables for stores open at least a year. Comparable store sales fell 11.9 percent, consisting of an 11.2 percent decrease at Kmart nameplates and a 12.4 percent decline at Sears Domestic stores. Wall Street was expecting revenues at $4.05 billion.
Edward S. Lampert, chairman and chief executive officer, said, “While this was certainly a challenging quarter for our company, it was also one that clearly demonstrated our commitment to return Sears Holdings to solid financial footing. We recognize that we need to accelerate our efforts to improve our operational performance and are moving decisively with our $1.25 billion restructuring program.”
The company said initiatives to date have resulted in $700 million annualized cost savings already, and have made incremental actions to increase its previous targeted goal of $1 billion to $1.25 billion. Further, it has paid down $418 million of term loans outstanding under its revolving credit facility. Earlier this week, the company annuitized $515 million of pension liaiblity, reducing the overall size of the pension plan, as well as reduce future cost volatility and administrative costs. It also reached an agreement to extend the maturity of $400 million of its $500 million 2016 Secured Loan Facility to January 2018 from its previous due date of July 2017. That agreement also gives Sears an option for a further extension until July 2018.
Sears, through its chief financial officer, said it would continue to review its options to maintain if financial flexibility. Rob Riecker, cfo, said: “We will continue to evaluate our options to deliver further improvements to our operational performance and balance sheet.”