Hoffman Estates, Ill. – Sales declines and continued investments in its digital shopping platform led to a $534 million third-quarter loss for Sears Holdings.
The red ink increased from a $498 million loss in the year-ago period.
Revenues fell 7 percent to $8.3 billion for the three months ended Nov. 2, and U.S. comp store sales declined 3.1 percent on weakness in CE, major appliances and other core categories.
Sears attributed the sales declines to store closures, the spin-off of its Sears Hometown and Outlet specialty chain, unfavorable currency exchange rates, and the weaker comps.
Comps slipped 2.1 percent at Kmart on softness in CE and toys, and fell 4 percent at U.S. Sears stores on across-the-board declines led by CE and majaps.
The continued decline in Sears’ jewel-in-the-crown white-goods business comes as manufacturers, independent dealers and other national chains report a resurgence in majap demand. The latter include Lowe’s, which yesterday cited appliances as a top-performing category in the third quarter, and Best Buy, which earlier this week reported a 24 percent increase in majap comps for the period.
In a statement, Sears Holdings chairman/CEO Eddie Lampert said the company has been investing hundreds of millions of dollars annually in its multichannel platform while maintaining traditional promotional programs and marketing expenditures, which has impacted margins and expenses.
The investments have been largely focused on digital initiatives like social media marketing; leveraging data and analytics to make targeted offers; and the blanket Shop Your Way-branded loyalty program, which appears to be supplanting the Sears and Kmart franchises.
“We are proactively transforming our business to a member-centric integrated retailer leveraging Shop Your Way to benefit from the changing retail landscape,” Lampert said. “We are transitioning from a business that has historically focused on running a store network into a business that provides and delivers value by serving its members in the manner most convenient for them: whether in store, in home or through digital devices.”
Lampert said 70 percent of sales are now made to Shop Your Way members, up from 65 percent last quarter, and that online and multichannel sales have grown 17 percent year to date.
Looking ahead, chief financial officer Rob Schriesheim said the company is on track to generate $2 billion of liquidity during the current fiscal year, ahead of its goal of $500 million, as it secured a new $1 billion loan and sold off store leases in Canada.
The retailer is also contemplating spinning off its Lands’ End and Sears Auto Center businesses, Schriesheim said, as total debt rose from $3.1 billion in February to $4.7 billion by the end of the third quarter.