Sears Suffers 3Q Loss, Warns of Store Closures
Hoffman Estates, Ill. Sears Holdings Corp. reported Tuesday that third-quarter results showed wider-than-expected losses, which the retailer said may lead to additional store closings.
Sears attributed the losses to a weak economy that negatively impacted sales at its U.S. Kmart and Sears, Roebuck divisions, and said it may close additional stores.
Sears lost $146 million during the three months ending Nov. 1. That compares with a profit of $4 million in the same period last year.
Revenue dropped more than 8% to $10.66 billion from $11.62 billion as the company's Sears department store's comparable sales slid 10.6% in the United States. Same-store sales at Kmart slipped 7%. Total same-store sales fell 9%.
Sears said it will take a pretax charge of $21 million in the fourth quarter related to the closing of eight underperforming stores. The company said it will continue to evaluate additional store closings or divestitures, remodels, acquisitions and stock and debt repurchases to boost its financial flexibility.
Meanwhile, Sears withdrew its forecast for earnings before interest, taxes, depreciation and amortization, citing the severe economic slowdown.
The company said sales declines were driven by housing related departments such as appliances, a pullback in consumer spending and a shift in its promotional strategy for certain goods.
Aside from closing underperforming stores, interim CEO and president W. Bruce Johnson said in a statement that Sears has prepared for a challenging holiday season by cutting inventory and reducing expenses. The company also began promoting layaway programs at Kmart and resurrected the program at Sears locations to provide consumers with another payment option.
"We believe we have positioned ourselves well for a difficult holiday shopping season," Johnson said.
The company also said Tuesday that Scott Freidheim, formerly chief administrative officer at Lehman Brothers Holdings Inc., will be its new executive VP of operating and support businesses. Former Banana Republic executive Nick Coe has been appointed president of Lands' End.