Sears Holdings said disciplined cost management and inventory control helped it offset a poor holiday season to deliver diminished fourth-quarter losses.
Adjusted EBITDA (earnings before interest, tax, depreciation and amortization) narrowed to $61 million for the three months ended Jan. 28, compared with $137 million for the prior-year quarter.
But net loss, which includes a non-cash accounting charge of $381 million, ballooned to $607 million for the period, compared with last year’s net loss of $580 million.
Also contributing to the red ink were disappointing holiday sales. Total revenue fell 16.4 percent to $6.1 billion due to store closings and a 10.3 percent comp-store sales decline, reflecting what chief financial officer Jason Hollar described as a “challenging holiday selling season.”
Broken out by chain, Kmart comps fell 8 percent, dragged down primarily by weakness in CE.
At Sears, poor performance within the retailer’s core major appliance business, as well as CE, led comps down 12.3 percent.
“As many of you know, 2016 proved to be another challenging year for most ‘bricks and mortar’ retailers,” Sears chairman, CEO and chief investor Eddie Lampert noted in his occasional corporate blog. “Our company was not immune to these headwinds.”
To help stabilize Sears’ finances, Lampert, through his ESL Investments hedge fund, provided the company with up to $1 billion in liquidity last quarter through a real estate-backed loan and letters of credit.
The retailer is also looking to sell or sub-lease another $1 billion in real estate holdings; cut an additional $1 billion in costs through store closings and streamlining operations; and picked up an initial $525 million from the sale of its private-label Craftsman brand to Stanley Black& Decker after recently closing that deal.
Looking ahead, the company will continue to focus on its Shop Your Way multichannel platform, which deemphasizes the Sears and Kmart brands, leans heavily on third-party sellers, and promotes online over physical shopping.
In related news, Sears’ spinoff chain, Sears Hometown and Outlet Stores, reported a similarly dour fourth quarter. Net loss widened to $45.8 million from $22.6 million last year, and comp sales decreased 4.1 percent for the three months ended Jan. 28.
The downturn was due largely to the closing of 109 of its 1,129 locations during the quarter, which resulted in a $16.2 million charge and contributed to a 9.2 percent decline in net sales, to $49.4 million.
Sears Hometown is the nation’s fifth-largest majap chain according to TWICE’s Top 50 Major Appliance Retailers Report, with $1.6 billion in white-goods sales in 2015.
Its spinoff from Sears, and the loss of those sales, led to Sears’ fall from first to third place on the TWICE registry, behind Lowe’s and The Home Depot and ahead of Best Buy.