Battered retailer Sears Holdings Corp. posted its largest quarterly loss Thursday since Sears and Kmart combined three years ago, providing surprising results far below Wall Street forecasts.
The company said it lost $56 million, or 43 cents a share, in its first quarter as it fought for shoppers and cut prices to clear merchandise from store floors. That is a dramatic reversal from the retailer’s year-earlier profit of $223 million, or $1.45 a share.
“It was a pretty ugly quarter,” said Morningstar analyst Kim Picciola. “All in all, not only are they facing the challenges from the uncertain macro environment, but they’re still struggling internally from some of their own issues. And I think that shows in the results.”
On an adjusted basis, Sears reported a loss of 53 cents a share for the three months that ended May 5, compared with profit of $1.15 a share in the same period last year.
Led by financier Edward Lampert, who acquired Kmart in 2003 and Sears, Roebuck & Co. in 2005, Sears is in the midst of a high-stakes restructuring aimed at reconnecting with shoppers and reinvigorating atrophied same-store sales, which have fallen for the last nine consecutive quarters.
Hoffman Estates, Ill.-based Sears said Thursday that customers were forced to spend more money to cover the soaring costs of gas and food. That knocked down sales nearly 6% to $11.1 billion.
Analysts surveyed by Thomson Financial expected profit of 15 cents a share on sales of $11.41 billion.
Executives said Sears’ same-store sales slumped 9.8% in the U.S., while Kmart saw its same-store sales shrink 7.1%. Total domestic comparable-store sales, an important retail industry metric of sales at stores open at least one year, declined 8.6%.
Especially hard hit were sales of home appliances and products for lawn and garden care. Clothing sales also fell.
Sears shares fell $3.22, or 3.6%, to $86.14.