The retailer on Thursday reported declines in comparable-store sales
at its Kmart and U.S. namesake chain for the crucial holiday season
that were even sharper than for the third quarter.
At its U.S. Sears stores, sales at stores open at least one year, an
industry benchmark known as comparable sales, were down 9.2 percent
in the nine weeks that ended January 6 and down 5.7 percent at the
discount Kmart chain.
Sears shares were down 13.4 percent at $36.85 in after-hours
Sales at the company have been falling since 2005, when billionaire
hedge fund manager Edward Lampert merged the two U.S. chains in an
$11 billion deal.
The retailer has closed about 300 U.S. stores since 2010, tightly
managing inventory, selling real estate and shedding assets at home
and in Canada as it tries to engineer a turnaround. The company has
about 2,000 Sears and Kmart locations in the United States.
"The results that we posted are not nearly what we want them to be,"
Lampert, Sears Holdings' chief executive officer and top
shareholder, wrote in a blog post.
The company has made a big bet that its strategy to make targeted
offers through digital and social means to members of its "Shop Your
Way" rewards program, which generated about 69 percent of holiday
sales, can fix the company.
In his blog, Lampert lamented that the holiday results "overshadow"
the progress Sears had made with the program.
Lampert told Reuters in November he saw room for further store
closings in 2014.
"They're not focused on executing at retail so that's why we've seen
the business deteriorate," said Mary Ross Gilbert, a managing
director at investment bank Imperial Capital.
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Imperial has an underperform rating on Sears shares and a sell
rating on its 6-5/8 percent bonds. Gilbert said that despite the
holiday results, the company had enough liquidity in the near term.
Retailers faced the most promotional holiday season since the
recession, trying to outdo one another with deep discounts to lure
shoppers, adding further pressure to Sears and Kmart. As a result, a
number of retailers cut their profit forecasts on Thursday.
Sears said it expects to post a lost of between $11.85 and $12.88
per share for the fiscal year ending February 1. That includes a
loss of $2.35 to $3.39 per share for the holiday quarter.
At Kmart, business fell in consumer electronics, groceries and toys,
while at Sears it was down in electronics as well as home
appliances, among other categories.
(Reporting by Phil Wahba in New York; editing by Andre Grenon,
Leslie Adler and Lisa Shumaker)
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