HOFFMAN ESTATES — Sears posted a second-quarter loss, with perpetually weak sales overshadowing the retailer’s efforts to cut costs and slow its cash burn. CEO Edward Lampert’s hedge fund will forward the ailing chain $300 million in additional debt financing.
Traditional department stores like Sears are trying to reinvent themselves as shoppers shift more of their purchases online, buy clothes at discounters and spend more on experiences. But Sears has dealt with weak sales for years, unable to keep up with competitors in appliances, like Home Depot, or general merchandise, like Wal-Mart, or everything, like Amazon.com.
Sears posted sales declines across the board including in home appliances and lawn and garden tools. Competition is increasing, with J.C. Penney also bringing back major appliances like refrigerators more than 30 years after abandoning the sector.
Given Sears’ weak performance and market share losses in many categories including appliances, Greg Melich, an analyst at investment banking advisory firm Evercore ISI, noted that the company “does not appear well-positioned for holiday or 2017.”
Lampert, who has long pledged to investors that a turnaround is in store, said in a statement that he believes the company is making progress, focusing on its best stores and certain categories as well as enhancing its membership experience.
The company has tried to shift its focus from running a store network to a member-focused business. Loyal shoppers receive incentives to buy, but those moves haven’t gained much traction with consumers.
Chief Financial Officer Rob Schriesheim, who plans to leave the post but will remain as an adviser through January, said Sears is still looking at options for its Kenmore, Craftsman, DieHard and Sears Home Services businesses by evaluating possible partnerships or other transactions. The company has said it believes the Kenmore, Craftsman and DieHard brands can grow significantly with an expanded presence outside Sears and Kmart.
Sears has been selling assets to raise cash and accelerating store closures. In April, it said would close another 68 Kmarts and 10 Sears stores, or nearly 5 percent of its nearly 1,700 stores. In 2011, it operated 4,000 stores.
For the period ended July 30, Sears Holdings Corp. lost $395 million, or $3.70 per share. A year ago, it earned $208 million, or $1.84 per share. Losses, adjusted for one-time costs, were $2.03 per share. Revenue for the Hoffman Estates, Illinois-based company dropped to $5.66 billion from $6.21 billion.
Total sales at stores open at least a year declined 5.2 percent. Sales at Kmart locations open at least a year fell 3.3 percent, while Sears same-store sales tumbled 7 percent. This figure is a key indicator of a retailer’s health because it excludes volatility from locations recently opened or closed.