(Corrects proceeds in ninth paragraph of story first published Aug. 16.)
The net loss narrowed to $132 million, or $1.25 a share, from $146 million, or $1.37 a share, a year earlier, the Hoffman Estates, Illinois-based company said today in a statement. Sales fell 6.6 percent to $9.47 billion.
Chief Executive Officer Lou D’Ambrosio has been working to keep the retailer’s inventory in line with customer demand, with domestic levels decreasing by $512 million from the year-earlier period. The lower cost of sales in the quarter helped Sears’s gross margin widen to 26.7 percent of sales from 25.7 percent a year earlier.
“They clearly have a lot of issues that need to be addressed; they’re beginning to address them,” Matt McGinley, a managing director at International Strategy and Investment Group in New York, said today in a telephone interview. His firm recommends selling the shares.
Sears has added in-store wireless service, equipped its sales force with iPads and promoted customer-loyalty programs as the retailer works to reverse five straight years of sales declines. Comparable-store sales once again declined, by 2.9 percent at U.S. Sears stores and by 4.7 percent at Kmart, hurt by lower electronics prices and declining sales of lawn and garden equipment during the drought.
Sears is working to gain shoppers by offering promotions tied to its credit-card and layaway programs, and by adding features such as mobile checkout, Chief Financial Officer Rob Schriesheim said today in a telephone interview.
Sears rose 6.5 percent to $60.29 at the close in New York. The shares have gained 90 percent this year.
In February, Sears announced the plans to spin off its smaller-format Hometown, Hardware and and Outlet stores after posting a $2.4 billion fourth-quarter loss, its largest quarterly loss in at least nine years.
Sears is spinning off about 1,238 stores to generate cash, potentially raising $346.5 million. Sears Hometown also plans to pay a $100 million cash dividend to Sears Holding.
In May, the retailer said it planned a partial spinoff of its Canadian stores that would reduce its stake to 51 percent from 95 percent. Sears Canada yesterday said its second-quarter loss widened to C$9.8 million ($9.9 million) amid increased competition from U.S.-based retailers. Sales fell 8.5 percent to C$1.05 billion.
Executives have said they’d consider more asset sales. D’Ambrosio told shareholders at the company’s annual meeting in May that selling its Lands’ End clothing brand wouldn’t be difficult.
“We have nothing imminent planned for Lands’ End,” Schriesheim said.
While the moves stem immediate liquidity concerns, the retailer’s future still is uncertain, McGinley said.
“Am I going to bet on this as a business over the long run? No,” he said. “Are they making progress versus the disasters that they were having over the past year? Yeah, they’re making a little bit of progress.”
Other department stores aimed at middle-income Americans have posted declining sales this year. Kohl’s Corp. (KSS), the third- largest U.S. department-store company, last week cut its annual profit forecast after second-quarter sales declined 1 percent to $4.21 billion and net income fell 20 percent.
J.C. Penney Co., the fourth-largest U.S. department-store chain, reported a $147 million second-quarter loss as Chief Executive Officer Ron Johnson overhauls pricing and merchandise. Sales slid 23 percent to $3.02 billion.
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