Shares rise on news some stores to close
CHICAGO – Sears Holdings Corp. posted its biggest quarterly loss since financier Edward Lampert combined Sears and Kmart into one retail company, due mainly to hefty charges related to store closures and disappointing U.S. sales.
The company also withdrew its operating profit outlook because of the country’s economic woes. Its stock soared nearly 17 percent, however, amid broader market gains after the retailer announced it was closing more underperforming stores and hiring a trio of new executives.
Still, the $146 million third-quarter loss – worse than had been expected and the company’s second quarterly loss in the past year – is another sign of how difficult it will be for the venerable retailer to right itself amid growing competition and customers who are shopping at its stores even less than before because of the recession.
“They’re struggling in this difficult economic environment and their exposure to home-related categories like appliances is not helping,” said Morningstar analyst Kim Picciola.
Sears, whose proprietary brands include Kenmore and Craftsman, is in the midst of a high-stakes restructuring aimed at reconnecting with shoppers and reinvigorating its sales at established stores, which have been dropping for nearly three years. Meanwhile, the company continues to search for a permanent chief executive to replace Aylwin Lewis who left in February.
Sears Holding, formed after Lampert acquired Kmart in 2003 and Sears, Roebuck and Co. in 2005, posted a loss of $1.16 per share for the three months ending Nov. 1. That compares with a profit of $4 million, or 3 cents per share, in the same period last year. Excluding a charge related to 14 store closings and gains on Sears Canada hedges, Sears posted a loss of 90 cents per share in the latest period.
Revenue dropped more than 8 percent to $10.66 billion from $11.62 billion as sales at established Sears department stores slid 10.6 percent in the U.S. Same-store sales at Kmartslipped 7 percent.