Sears Holdings Corp. — which is closing another 28 Kmart stores later this year — posted a narrower second-quarter loss, helped by financial maneuvers such as the sale of real estate holdings and the lowering of rent obligations through lease terminations.
For the three months ended July 29, the company said the loss was $251 million, or $2.34 a diluted share, versus a loss of $395 million, or $3.70, a year ago. Total revenues fell 22.9 percent to $4.37 billion from $5.66 billion, due mostly to store closures and fewer pharmacies in stores that remained open. Merchandise sales in the quarter fell 24.7 percent to $3.50 billion from $4.65 billion, while the reduction in consumer electronics in the stores contributed to the decline. Comparable-store sales decreased 9.4 percent at Kmart stores and were down 13.2 percent at Sears stores. Excluding the impact of fewer pharmacies and reduced assortment in electronics, comps at Kmart declined 6.8 percent and fell 12.1 percent at Sears.
Wall Street was expecting EPS of $2.48 on revenues of $4.2 billion.
Edward S. Lampert, chairman and chief executive officer, said, “We are making progress on the strategic priorities we outlined earlier this year and remain focused on returning our company to profitability.” He added that while the third quarter historically is the retailer’s “most difficult quarter over the past several years, we are working toward making meaningful improvement in our performance this year as a result of the restructuring actions we have put in place.”
The company earlier in the year unveiled an initiative to improve its balance sheet. To date, the company has realized $1 billion toward its targeted goal of $1.25 billion in annualized cost savings from streamlining operations, reducing unprofitable categories and the closure of underperforming stores. The company also reduced its long-term debt obligations to $3.5 billion at the end of the quarter from the $4.2 billion owed at the end of 2016.
So far, Sears has closed 180 stores during fiscal year 2017. The additional 150 stores — both Kmart and Sears nameplates — it previously has slated for closure are expected to be closed by the end of the third quarter of 2017. The company has also identified another 28 Kmart stores that it now wants to close, with the closing dates scheduled for later this year.
“As a result of these actions, the company has begun to see improvement in the operations in the second quarter…particularly in the months of June and July as the restructuring program actions, including the closing of unprofitable stores, have begun to take effect,” the company said.