* Quarterly loss 86 cents/share in line with estimates
* Sales fall, missing Wall Street expectations
* Shares up 6 percent
By Dhanya Skariachan
Aug 16 Sears Holdings Corp, the
retailer controlled by hedge fund manager Edward Lampert,
reported a quarterly loss in line with Wall Street estimates on
Thursday as lower expenses offset weaker-than-expected sales,
and its shares rose 6 percent.
The operator of Sears department stores and the Kmart
discount chain has closed stores, tightly managed inventory,
sold some real estate and shed assets to become more profitable
in recent quarters.
"The operating team at Sears again deserves credit for
bringing Sears back from the brink," Credit Suisse analyst Gary
Sales have fallen every year since 2005, when Lampert merged
two iconic U.S. retail chains - Kmart and Sears Roebuck and Co -
in an $11 billion deal.
"While we have made progress, we have a lot more work to get
done," Sears Chief Executive Officer Lou D'Ambrosio said in an
employee memo obtained by Reuters. "We have seen some great
execution, but it's not happening always and every day."
Sears spun off its Orchard Supply Hardware Stores unit in
December. In February, it announced plans to sell some prime
real estate and spin off its Sears Hometown and Outlet
businesses and certain hardware stores. In May, it said it would
spin off a large chunk of its stake in its Canadian unit, Sears
Balter said he expected the company to divest the assets
piece by piece, with apparel brand Lands' End likely to be next.
In the second quarter ended on July 28, Sears' net loss
narrowed to $132 million, or $1.25 a share, from $146 million,
or $1.37 a share, a year earlier.
Excluding pension and severance expenses and mark-to-market
gains, the loss was 86 cents a share, in line with analysts'
estimates, according to Thomson Reuters I/B/E/S.
The results benefited from fewer apparel discounts and
better appliance margins.
Rival J.C. Penney Co Inc's woes also helped the
company as the two chains are neighbors in most malls, Balter
said. Penney's sales at stores open at least a year fell 21.7
percent in the quarter following a change in its pricing
Sears' sales fell 6.6 percent to $9.47 billion, while
analysts had expected $9.63 billion. The company blamed the
decline in part on weakness in the electronics and lawn and
U.S. same-store sales fell 3.7 percent, including a 2.9
percent decline at the company's namesake department stores and
a 4.7 percent fall at Kmart. Same-store sales at Sears Canada
fell 7.1 percent.
Sears Holdings' struggles are well-documented. The chain,
home to brands such as Craftsman tools and Kenmore appliances,
is a victim of the weak economy and its own missteps.
Sears also faces cut-throat competition from the likes of
Home Depot Inc, Lowe's Cos Inc, Wal-Mart Stores
Inc, Target Corp, Best Buy Co Inc,
Macy's Inc and Kohl's Corp, as well as Penney.
Analysts have said top Sears shareholder and Chairman
Lampert had not invested enough in the retail operations,
resulting in dwindling sales. While Lampert has refuted such
criticism, a blueprint he laid out in May to boost results
included plans to invest millions of dollars in a "Shop Your
Way" rewards program and improving the layout and signs in the
"We need to remain committed to finding more ways to get our
customers to shop our stores, engage with us online, use our
mobile apps and think of us as their one stop integrated retail
destination," D'Ambrosio said in the memo.
Earlier this week, Sears Canada reported a wider loss on
Shares of Sears were up 6 percent at $60 in afternoon