Sears Posts Smaller 3Q Loss, Sales Keep Sliding

Dow Jones Newswires

Sears Holdings narrowed its loss in the third-quarter as the company closed some stores. Kmart same-store sales declined 7.5%, while Sears domestic same-store sales were down 9.6%, as apparel and consumer electronics sales declined. Still, Chief Executive Eddie Lampert remains optimistic about returning to profitability "by concentrating on our best stores, rewarding our best members and pursuing our best categories." Sears had 1,687 stores at the end of the third quarter, down from 2,249 a year earlier. Heading into the fourth quarter, Mr. Lampert said Sears is focused on product offerings and promotions to boost member engagement through the holiday season. Sears reported a loss of $454 million, or $4.26 a share, compared with a loss of $548 million, or $5.15, a year earlier. Excluding items such as store closures and amortization, the adjusted loss widened to $2.86 a share from $2.71. Revenue dropped 20% to $5.7 billion. Analysts polled by Thomson Reuters had forecast an adjusted loss of $2.84 a share on $5.5 billion in revenue. During the quarter, gross margin decreased $339 million to 21.9% on a decline in sales and gross margin rate, which the company attributed to a decrease in occupancy leverage, partially offset by an improvement in overall product margin. Sears has been struggling to transform itself by investing in new technologies and services to better equip it for the digital age. It also has focused on returning to profitability, sometimes at the expense of sales. The company has said that in many merchandise categories it is logging improvements in profitability despite sales declines. Earlier this year, Sears spun off 235 properties into a real-estate investment trust it created called Seritage Growth Properties, and it also created joint ventures that hold additional properties with three mall owners. Together, the transactions raised $3 billion in proceeds. Shares, which closed at $20.41 and are down about 40% this year, were inactive premarket. Write to Anne Steele at Anne.Steele@wsj.com

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