Sears hints at revival while posting yet another huge quarterly loss
Sears Holdings Corp. posted another loss in its latest quarter but said sales turned positive this summer. That sent shares up in late trading.
The company reported a loss of $508 million in its fiscal second quarter, or $4.68 a share. That compares with a loss of $250 million, or $2.33 a share, a year earlier. Sales of $3.2 billion were down sharply from $4.3 billion in the prior-year’s second quarter. Much of that was from store closings, but sales at stores open at least a year — so-called comparable sales — fell 3.9%.
Sears has now reported a loss in six of its last eight quarters. But Chief Executive Edward Lampert, whose hedge fund is looking at buying Sears’ Kenmore brand and a home-improvement unit, said he was encouraged by improvements in July and August, when comparable sales rose 3% and 2.5%.
“We have yet to achieve our goal of returning the company to profitability,” Lampert said. “We continue to close unprofitable stores, and we are hopeful that we can stabilize our store base at a meaningful level in the near future.”
It’s unclear how much Sears is being helped by strengthening consumer confidence and a healthy economy — factors that have underpinned the recent success of merchants such as Walmart Inc. and Target Corp. To stanch its continuous cash bleed, Lampert is selling assets and slashing expenses. He’s also extended almost $2.5 billion in credit to the company, according to an estimate by Bloomberg Intelligence analyst Noel Hebert.
Shares of the Hoffman Estates, Ill., company rose as much as 20%, to $1.45, in trading after markets closed Thursday. The stock has lost two-thirds of its value this year through Thursday, when it closed down 9% to $1.21.
Lampert has closed hundreds of unprofitable stores — with about 150 more slated to be shut this year — and cut more than $1 billion in annual expenses. But losses have continued to pile up to more than $11 billion since 2012. In the meantime, the company has put more assets on the block, including its Kenmore brand for the second time in two years.
Lampert’s hedge fund, ESL Investments Inc., made a $470-million offer for the brand and a home-improvement unit last month. The company is “beyond desperation at this point,” Hebert said of the bid. “This is the calculated extraction of residual value of the estate.”
Directors are still evaluating the possibility of selling Kenmore and other assets, Sears said Thursday.
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