Updated! Sears Holdings narrowed its third-quarter net loss to $454 million, from last year’s $548 million, amid a continuing sales slide.
Revenues fell 20 percent to $5.8 billion, reflecting a $611 million hit from the uncoupling of Sears Canada and declining comps at Kmart and Sears.
Total comps slid 8.6 percent, accounting for $417 million of the revenue decline, as the retailer revved up sales promotions for the three-month period, ended Oct. 31.
At Kmart, comps fell 7.5 percent as declines in consumer electronics and apparel offset gains in major appliances and mattresses. Excluding the impact of CE, comps would have decreased 6.4 percent.
The company said Kmart’s CE merchandising remains in flux, describing it as “a business we continue to alter to meet our members’ needs.”
CE was also a drag on Sears’ comp sales, which declined 9.6 percent including the category and 8.2 percent excluding it, partially offset by gains in mattresses.
On a pre-recorded earnings call, chief financial officer Rob Schriesheim said CE and apparel accounted for half of the company’s comp decline, and reiterated Sears’ efforts at sharing more of the operational burden of tech products.
“As we have discussed, we are altering our consumer electronics business model to one that requires less working capital and operating expenses by leveraging partners to continue to meet the needs of our members,” he said. “The change in business model has negatively impacted our comparable store sales in this category; however, it has resulted in improved profitability, which is our primary focus.”
At the same time, Sears is ramping up its home services offering; investing in key categories like appliances and fitness equipment; and will focus on its best-performing stores while selling, subletting or shutting its less productive real estate, Schriesheim said.
In a statement, chairman/CEO Edward Lampert pointed to “a fifth consecutive quarter of improved year-over-year results” based on adjusted EBITDA (earnings before interest, taxes, depreciation and amortization).
He also cited the recent recruitment of a new senior management roster to help drive his vision of “a member-centric integrated retailer,” and promised continued sales promotions through the holiday selling season, while working to restore profitability. The company’s earnings game plan is outlined below:
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