POSTED: 01:30 a.m. HST, Aug 19, 2011
NEW YORK » The operator of Sears and Kmart stores said Thursday that its second-quarter loss grew as it marked prices down to make room for fall merchandise.
The quarterly loss is the second in a row for long-struggling Sears Holdings Corp., which is led by billionaire Chairman Edward Lampert, and the fourth the company has reported in its last five quarters.
Sears cut 250 jobs and closed 29 stores during the second quarter to help cut costs, though analysts say the company's perennial weakness stems from cutting costs at the expense of investing in its stores.
Sears' net loss was $144 million, or $1.37 per share, compared with a loss of $39 million, or 35 cents per share, a year earlier.
Excluding one-time items, Sears lost $1.13 per share. Analysts expected a smaller adjusted loss of 64 cents per share.
Credit Suisse analyst Gary Balter said Sears fell short of expectations due to a "lack of store traffic, sales being driven by promotional activity and, in our opinion, the consumer's reaction to years of service cuts and lack of investment in infrastructure."
Revenue fell 1 percent to $10.33 billion. Analysts expected $10.22 billion. In one bright spot, online sales rose 30 percent.
"We are not satisfied with our results and are taking actions to turn around our performance in a challenging economic environment," said CEO Lou D'Ambrosio, who joined the company in February.
Revenue at stores open at least a year was flat at Kmart and down 1.2 percent at Sears. The company said lower sales of electronics hurt results. But it added that sales of outdoor home products, groceries, tools and appliances were better.
Revenue in stores open at least one year is an important gauge of a retailer's financial health because it excludes stores that open or closed during the year.
The company, which also includes Lands' End, as well as Kmart, is working to turn around results by cutting jobs and costs, closing underperforming stores and launching exclusive lines such as the Kardashian Kollection at Sears.
In addition to bringing in D'Ambrosio, it has shaken up management by naming Robert Schriesheim executive vice president and chief financial officer this week and hiring Monica Woo as chief marketing officer and Liz Claiborne executive Edgar O. Huber as CEO and president of Lands' End.
Sears plans to spin off its Orchard Supply Hardware Stores Corp. chain as a separate, publicly traded company.