The struggling retailer, which owns the Sears and Kmart chains, on Thursday reported a $748 million net loss in the third quarter, its worst performance in years. And comparable sales, which exclude the impact of stores closed in the preceding year, fell 4.4% at Kmart and 10% at Sears, deeper drops than in recent quarters.
What's more, these sales suggest market share losses: Sears' declines were disastrous compared to those of rivals like Macy's (m), Kohl's (kss), and J.C. Penney (jcp), which are also contending with a tough retail environment.
Sears repeated its claim it's in the midst of a reinvention that would see it become a membership-based retailer far less reliant on physical stores, and leveraging its Shop Your Way loyalty program—but all this has not yielded any results yet, even by the company's own admission.
"We remain fully committed to restoring profitability to our Company," CEO and top investor Eddie Lampert said in a statement for the umpteenth time. "We understand the concerns related to our operating performance."
Since the hedge manager engineered the merger of Sears and Kmart in 2005, the company has yet to report a year of comparable sales growth, despite hundreds of store closings.
It has lost more nearly $10 billion since 2010 and the retailer has sought to plug that with the sale of countless assets like some of its best stores, its stakes in Sears Canada and Lands' End. It is currently trying to find buyers, investors or partners, for its remaining crown jewels, its Kenmore, Craftsman, and DieHard brands. (Sears provided no update on that in its release.) Sears has also had to borrow money from Lampert.
Sears finance chief, Jason Hollar, said the company had a lot of flexibility to keep closing more stores given that about 550 of its stores have leases that expire in just a few years. Sears "will continue to close unprofitable stores as their leases come due," he said, adding that the company would "end up with a smaller but meaningfully-sized store base."
For its fiscal third latest quarter, Sears' loss came to $6.99 a share, compared to $4.26 a share, a year earlier. On an adjusted basis the company posted a loss of $3.11 a share. Revenue fell 13% to $5.03 billion hurt by many store closings and a 7.4% decline in comparable sales.
Sears' promises to investors have stretched investor credulity. Indeed, shares have fallen by about 40% this year. But Hollar insisted Sears planned to hit that goal at some point.
"We cannot guarantee when we will return to profitability, but it is our intention to do so as soon as possible," said Hollar.