Sears (NASDAQ:SHLD) shares were plunging Thursday after the struggling retailer released its financial results for the third quarter that ended November 2. Shares closed in New York down 3.08 percent at $59.80.
In its third-quarter earnings, Sears reported a wider-than-expected quarterly loss, as results were affected by weak sales at both its namesake department stores and its Kmart discount chain. The net loss in the third quarter totaled $534 million, or $5.03 per share — a figure that reflects a 6.75 percent drop from last year, when Sears reported a net loss of $498 million, or $4.70 per share. When excluding severance costs, tax-related adjustments, and a pension expense, Sears’s adjusted loss was $2.88 per share.
The Hoffman Estates, Illinois-based company also reported on Thursday that its revenue fell 7 percent to $8.27 billion from $8.86 billion a year ago, a loss that reflects fewer Sears and Kmart stores operating. Revenue at stores open at least a year — a key gauge of a retailer’s health — dropped 3.1 percent, including a decline of 2.1 percent at Kmart.
Sears has come under significant scrutiny as of late as CEO Edward Lampert maintains his confidence in closing stores, selling real estate, and shedding assets, but the retailer’s latest report shows that the CEO’s efforts aren’t exactly paying off.
Wall Street has encouraged Lampert to better invest in stores instead of tightly managing inventory, but the chairman and CEO stood by his game plan Thursday, when he said in a statement, “We are transitioning from a business that has historically focused on running a store network into a business that provides and delivers value by serving its members in the manner most convenient for them: whether in store, in home or through digital devices.”
Lampert also reinforced Sears’s effort to concentrate on its Shop Your Way Loyalty program, explaining that the company has benefitted from an increase in consumers interested in the membership benefits and a better-developed digital and social relationship with them. The CEO said that 70 percent of Sears’s sales are made via Shop Your Way members, up from 65 percent in the second quarter.
Sears will now work to redeem itself in the lucrative holiday shopping season, a period that can account for up to 40 percent of retailers’ annual revenue. Many companies catering to lower- and middle-income shoppers have already had to cut their outlooks on account of the uncertain economy, and Sears is no different.
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