Greater Chicago, IL, United States (4E) – Sears Holdings Corp recently announced its second-quarter loss for 2014, extending its sales slump to the 30th straight quarter. The net loss now tallies at USD573 million, from just USD194 million from last year.
In a statement, Sears CEO Edward Lampert said, “Our second quarter earnings are unacceptable.” Lampert is a billionaire hedge fund manager who controls the managing company of the retailer.
According to Lampert, Sears would undertake a new round of cost reductions, close underperforming stores and improve pricing as well as go aggressive and promotions. In the past months, the CEO has been either selling and spinning off assets to make cash at the same time grow the retailer’s digital and rewards programs. This program is called ‘Shop Your Way’ which has gained success but the major issue is still the stores, which have been called ‘outdated and shabby.’
Overall revenue declined 10% to just USD8 billion from USD8.87 billion. The only positive note for the company was the increase in its online as well as multichannel sales, which grew 18% from last year.
The current store came out of the combination of Sears and Kmart back in 2005. The issue now is that it has grown to be clumsy against newer, leaner rivals such as Wal-Mart and Home Depot. The bigger issue is in the target market of the big box retailer. Because of the slow recovery of the US economy, not everyone has received the benefits that translates to spending power in the stores. This has caused the shoppers to opt for online shopping compared to being in the stores physically.
Lampert added, “I am personally committed to investing in and driving our transformation, improving the profit performance of the company, ensuring our financial flexibility, all the while creating shareholder value.”
Not only Sears USA is floundering, its Canadian counterpart is also in the financial doldrums. Its loss, as reported last Wednesday, was pegged at CAD0.21 per share, which compared to a profit of CAD152.8 million or just CAD1.50 per share reported last year.
According to Sears Canada President and CEO Douglas Campbell, through a statement, “We took aggressive markdowns to clear aged inventory and surplus spring merchandise and ended the quarter with 20% less spring/summer inventory than last year. This puts in an improved inventory quality position heading into fall season, allowing us to devote more of our selling floor space to seasonally relevant items as we move forward.”
This was seconded by a statement from Sears USA CFO Rob Schriesheim, who said its Canadian counterpart is looking for ways to improve its Canadian operations as a whole, where 51% is owned by Sears USA. One option he said was ‘a sale of our interest in Sears Canada as a whole.’
Back in the US though, Sears is also being pummeled in the stock market, as it fell 8.5% in early morning trading as of Aug. 21. The last time it reported a profit was in the first quarter of 2012 and since then the company has been in the red, a loss of nearly USD3.5 billion.