- Retailer has lost more than $7 billion in the last four years
- CEO Lampert has spun off real estate and sold other assets
Sears Holdings Corp., the retailer run by hedge-fund manager Edward Lampert, posted a $454 million third-quarter loss as its shrinking store base hurt sales.
The net loss of $4.26 a share compares with one of $548 million, or $5.15, a year earlier, the Hoffman Estates, Illinois-based company said in a statement Thursday.
The results show Sears has a ways to go to returning to profitability. Lampert has spun off assets and sold stores, leaving a stripped-down retailer that continues to post declining same-store sales. Sears also is suffering from problems that are ailing the whole industry, including slowing mall traffic and consumers who are choosing to save more and to spend on experiences and services instead of goods.
“Sears has very weak company-specific fundamentals, but now you’re combining that with an industry backdrop across the department-store space that’s also quite bad,” said Matt McGinley, an analyst at Evercore ISI.
Comparable-store sales fell 7.5 percent at Kmart and 9.6 percent at Sears for an 8.6 percent decline companywide. Revenue is declining as the retailer pulls back on unprofitable categories like consumer electronics and clothing, McGinley said. Sears had $294 million of cash at the end of the quarter.
“We remain focused on restoring profitability to the company,” Chief Financial Officer Rob Schriesheim said on prerecorded conference call released Thursday. Sears has posted five quarters in a row of improved performance in its adjusted earnings before interest, taxes, depreciation and amortization, he said.
Sears shares fell 6.9 percent to $19 at the close in New York Thursday. The stock has declined 37 percent this year.
In June, Sears formed a real-estate investment trust with about 250 of its stores, a move that raised $2.7 billion. While proceeds from that move and other asset sales have mitigated the company’s cash consumption, Sears has posted a combined $7.12 billion of losses in the previous four fiscal years.
Lampert has poured resources into the company’s digital and loyalty programs as he shrinks the money-losing store base. While reducing store space makes sense, it may take too long for Sears to see the benefit, McGinley said.
“The likelihood of them effecting a turnaround is pretty low,” he said. “From an operating standpoint, it has not been good. From an asset-sale standpoint, it’s been very good, but they’re kind of at the end of that.”