Sears Loss Grows in Q3
HOFFMAN ESTATES, Ill.-Declines in sales and a jump in promotional activity made the ink in Sears Holdings' bottom line redder in its fiscal third quarter, ending on Nov. 2.
The company posted a net loss of $534 million in the quarter, compared to a net loss of $498 million in last year's third quarter. Net sales were down 6.6 percent to $8.3 billion, with corporate same-store sales off 3.1 percent. Comparable-store sales at Sears' domestic stores fell 4 percent, while same-store sales at Kmart declined 2.1 percent.
Within product categories, a Sears Holdings statement said home was one of the few areas at Sears stores in which sales increased. The chain reported sales drops in consumer electronics, lawn and garden, tools, home appliances, apparel and at Sears Auto Centers. At Kmart, most of the decreases occurred in grocery, household, drug, consumer electronics and toys.
In addition, gross margin at both Sears and Kmart felt the impact of promotional discounts and points given to members of Shop Your Way, the company's free and members-only program and shopping community that offers rewards, personalized deals, product reviews and services such as e-coupons and e-receipts for faster returns and exchanges. The company's overall gross margin fell 210 basis points to 23.3 percent. Selling, general and administrative expenses were slimmed by 9.4 percent in dollars and 90 basis points as a percentage of sales, to 27.3 percent.
Edward Lampert, Sears Holdings' chairman and CEO, said the company is continuing its efforts to transform its business model from running a store network to an integrated store/in-home/online shopping platform, centering on Shop Your Way. "Throughout this transition, we have continued with traditional promotional programs and marketing expenditures while investing in our member-centric model, which has impacted our margin and expenses," Lampert said. "While transformations of this scale are challenging, we believe we are making progress as we are seeing substantive continued increases in our (Shop Your Way) member engagement metrics."