The troubled retailer, which earlier this year recognized there are doubts about its viability, on Thursday once again reported enormous sales declines as it lost its hold on categories it used to dominate such as household appliances, and suggested more store closing were in the offing.
Sears Holdings, which operates the namesake department store chain and the Kmart discount stores, said comparable sales fell 12.4% at Sears, and 11.2% at Kmart. While Sears CEO Eddie Lampert recently invoked declining sales at many of the company's rivals, Sears' declines are far deeper than those of Macy's (m) and J.C. Penney (jcp).
On the bright side, Sears managed to report its first quarterly profit in almost two years, helped by lower expenses that are part of its $1.25 billion cost-cutting plan. Still, stripping out the impact of certain one-time items, Sears reported an adjusted loss of $230 million in the quarter ended April 29. Sears has lost about $10 billion in the last six years.
Shares, which have been volatile among concerns about Sears' cash levels, rose 18% in premarket trading. Still, they are down about 50% from a 52-week high.
Sears got a boost this week when it reported that it had been able to extend the maturity on some of its debt. Earlier this year, several credit agencies downgraded its debt and at least one invoked the possibility of bankruptcy giving the years-long sales declines. The company has been closing stores for years, shedding valuable assets and borrowing money from Lampert, a hedge fund manager, to stave off liquidity shortages.
Still, the deterioration of Sears' business has only accelerated in recent quarters, despite Lampert's protestations that he has been trying to transform the business into a retailer focused on members and less reliant on physical stores. The CEO, who this month blamed the media for many of Sears' problems and took the unusual step of suing a key vendor and blogging about it, conceded that, "We recognize that we need to accelerate our efforts to improve our operational performance."
His CFO, Rob Riecker, said in a statement that the retailer was looking at further ways to improve Sears' liquidity, and hinted at the possibility of additional store closings, saying "We will continue to closely evaluate the stores where a clear path to return to profitability is not in sight."