Q1 Loss Up at Sears; Company Closes Stores
HOFFMAN ESTATES, Ill.-Sears Holdings said its first-quarter net loss totaled $402 million, compared to $279 million last year, and added that it has closed about 80 underperforming stores this year and may close more during the remainder of the year.
Edward Lampert, chairman and CEO of the Sears/Kmart parent, said the first quarter reflected the challenges the company faces as it changes its business model. Sears Holdings has been transforming from a store-based network to a member-centric model keyed around its Shop Your Way program. Member sales grew from 68 percent of total sales in last year's first quarter to 74 percent this year, Lampert said, showing the progress of this transformation.
Overall merchandise sales and services fell 6.8 percent to $7.9 billion in the quarter, which ended on May 3. Same-store sales at Sears' U.S. stores edged up 0.2 percent, while at Kmart, same-store sales were down 2.2 percent.
Gross margin dropped 230 basis points to 23.2 percent. Selling and administrative expenses were slimmed by 5.8 percent in dollars but gained 30 basis points as a percentage of sales, to 26.5 percent.
Rob Schriesheim, chief financial officer, said Sears Holdings will continue to close unprofitable stores as leases expire, "and in some cases will accelerate closings when appropriate." Schriesheim added that the company is still evaluating its alternatives for the Sears Auto Center business. The company completed its spinoff of Lands' End during the first quarter.