Sears’ venerable appliance business took another hit this season, while the retailer continued to distance itself from CE.
Parent company Sears Holdings said comps at its namesake chain slid 14 percent during the three months, ended Aug. 1, hammered by decreases in electronics and home appliances. CE accounted for nearly 11 percent of the decline, reflecting a “shift away from low-margin categories,” the retailer said.
White goods had a better time of it at sister chain Kmart, where comps were up for the category. But the downturn in CE was even more severe, accounting for more than a quarter of the discounter’s total 7.3 percent comp decline.
Sears said electronics at Kmart “is a business we continue to alter to meet our members’ needs.”
Sears ranked 5th and Kmart came in 29th on TWICE’s CE/Majaps Top 100 Retailers Report, with combined category sales of $7 billion and $563 million, respectively, in 2014.
The company also attributed Sears’ and Kmart’s combined 10.8 percent comp declines to “highly targeted” promotions and marketing expenditures.
Net revenues for its fiscal second quarter fell 22 percent to $6.2 billion, reflecting the spin-off of Sears Canada and the closure of 600 stores during the trailing 12 months. The company currently operates 739 Sears stores and 963 Kmart locations.
Nonetheless, improving gross margin rates; lower payroll and ad expenses; and proceeds and tax benefits from lease-back real estate transactions helped generate $208 million in net income, compared with a year-ago net loss of $573 million.
In a statement, chairman, CEO and majority shareholder Eddie Lampert said the company is making progress in its multichannel evolution.
“During the quarter we completed many of the objectives we laid out to transform Holdings from a traditional, store-network based retail business model to a more asset-light, member-centric integrated retailer leveraging our Shop Your Way platform,” he said. “The successful completion of these actions has positioned Sears Holdings for long-term success and is consistent with our strategy to focus on our best stores, reward our best members and pursue our best categories as part of our transformation.”