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Sears’ Woes Continue Amid Turnaround Efforts

Hoffman Estates, Ill. — Sears Holdings announced a half-billion net loss for its second quarter, ended Aug. 2, a result that chairman and CEO Edward S. Lampert called “unacceptable.”

Net loss was $573 million for the second quarter of 2014, compared with $194 million for the prior-year period.  second quarter.

“We have continued to show progress in our transformation, as demonstrated by our year-over-year increase in online and multichannel sales, and with our member sales now representing 73 percent of eligible sales,” said Lampert in a statement. “However, our second-quarter earnings are unacceptable, and we are taking steps to address our performance on several levels.”

He cited cost reductions and investments in its Shop Your Way program as examples of measures being taken, as well as “rationalizing our physical footprint and improving pricing and promotions.”

Rob Schriesheim, Sears Holdings CFO, said 130 stores were closed in fiscal 2014, and more may be closed before the end of the year.

The retailer also said it continues to evaluate its Sears Auto Center business and the possibility of selling off Sears Canada.

Earlier this month, it announced a reorganization of its major appliance business.   

Noted Lampert, “Like any transformation, we must first overcome the burden of the initial costs before we can enjoy the benefits. We have a large and valuable portfolio of assets that provide us with the flexibility we need to fund our transformation as we proactively work to return Sears Holdings to profitable growth and deliver shareholder value.”

Comp-store sales for full-line Sears stores inched up 0.1 percent for the quarter vs. a decline of 0.8 percent the prior-year period. As with the previous quarter, consumer electronics took a toll on sales. If removed from the equations, comp-store sales would have risen 1.6 percent for the chain.

Kmart comp-store sales were down 1.7 percent for the quarter, compared with a 2.1 percent decline last year.

Online and multichannel sales grew 18 percent over the prior-year second quarter and 22 percent over the prior year first half.