Business

Winnipeg Free Press - PRINT EDITION

Sears loss shrinks despite lower sales

By: Candice Choi And Michelle Chapman

Posted: 08/17/2012 1:00 AM | Comments: 0

SEARS Holding Corp.'s push to turn around its ailing business is showing early signs of paying off, even as the retailer failed to stem declining sales.

The Hoffman Estates, Ill.-based company said Thursday aggressive cost-cutting and reduced inventory levels helped narrow its loss in the second quarter from a year ago, with results coming in line with Wall Street expectations.

"We did what we said we were going to do," CEO and President Lou D'Ambrosio said in a letter to employees, noting that the company still has plenty of work ahead.

Despite the company's efforts to improve the customer experience in recent months, a key sales figure declined in the quarter at both its Sears and Kmart stores.

In the U.S., the company said revenue from Sears stores open at least a year fell 2.9 per cent. The figure declined 4.7 per cent for Kmart locations. The metric is an indicator of health because it strips out the impact of newly opened and closed locations.

Sears blamed competitive pricing for weaker sales of electronics. Lawn and garden sales also fell, with drought across the country hindering purchases.

Fewer clearance items also dragged down revenue, with tighter inventory levels limiting the amount of seasonal merchandise markdowns. Pharmacy sales fell as popular drugs such as cholesterol fighter Lipitor have come out in cheaper generic versions.

Back in May, Sears said it was investing heavily in improving the customer experience, with changes such as improved displays and iPads for sales staff to research products and help customers check out wherever they are in the store.

In an emailed statement Thursday, Sears spokesman Chris Brathwaite noted the company continues to work on improving the shopping experience. He cited examples such as tying more promotions to its store credit cards and offering free flu shots at Kmart when customers spend $100 or more.

To boost shareholder confidence and restore profitability, the company has also looked to spinoffs and real estate sales. Three days ago, Sears said it is moving forward with plans to spin off its Hometown and Outlet stores along with some hardware stores into a separate company.

Sears is also spinning off a stake in its Canada division to focus on turning around its U.S. business.

For the period ended July 28, Sears lost $132 million, or $1.25 per share. That compares with a loss of $146 million, or $1.37 per share, a year ago.

Sears Canada reported a 7.1 per cent drop in revenue at stores open at least a year, hurt by lower sales of women's and men's clothing, tools, home decor and lawn and garden items and unfavourable foreign currency exchange rates.

-- The Associated Press

Republished from the Winnipeg Free Press print edition August 17, 2012 B9

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