(Adds analyst comments, background; updates shares)
By Maria Ajit Thomas
May 22 Sears Holdings Corp posted a
bigger loss for the first quarter as the struggling retailer
failed to arrest a fall in sales despite offering heavy
discounts to woo shoppers.
Shares of the company, which operates Sears department
stores and the Kmart discount chain, fell 4 percent in premarket
Sears, controlled by hedge fund billionaire Eddie Lampert,
has been shedding assets and closing stores as it battles the
operating losses and weak sales that have plagued the company
since 2005, when the two chains were merged.
Unappealing merchandise and poor store layouts have pushed
shoppers away from Sears and Kmart to Wal-Mart Stores Inc
and Target Corp, analysts say.
"The customer experience at Sears and Kmart is basically
horrific," Brian Sozzi, chief executive of Belus Capital
Advisors, said on Thursday.
Sears was once the largest retailer by revenue in the United
States, but it lost the crown to Wal-Mart in 1990.
Sears has been trying to move away from relying on stores
for revenue to focus on membership through its Shop Your Way
program, which integrates online shopping.
The company said that sales to Shop Your Way members
increased to 74 percent of eligible sales in the first quarter
from 68 percent a year earlier.
Sozzi, however, said the program was doing more harm than
good by offering discounts on already promoted, low-margin
"(Sears is) not driving high quality sales and they're
limiting the ability to charge a full price. In a way, they're
begging for customers by giving away their products," he said.
The company said last week it was exploring a sale of its 51
percent stake in Sears Canada Inc.
Sears said on Thursday that a potential stake sale could
raise about $730 million in cash at current market value.
On Wednesday, Sears Canada reported its steepest fall in
quarterly sales in almost five years.
Sears said it would close 80 stores or more in the year
ending January. The retailer operated about 1,900 Sears and
Kmart stores in the United States at the end of the first
U.S. comparable store sales fell 1 percent in the quarter
ended May 3.
Comparable store sales declined 2.2 percent at Kmart stores
in the United States, but rose 0.2 percent at Sears stores due
to higher demand for home appliances and home products.
Sears said its gross margin fell to 23.2 percent from 25.5
Net loss attributable to shareholders widened to $402
million, or $3.79 per share, from $279 million, or $2.63 per
share, a year earlier.
Revenue declined 6.8 percent to $7.88 billion, but came
higher than the average analyst estimate of $7.71 billion,
according to Thomson Reuters I/B/E/S.
Sears shares were trading at $35.04 before the bell. The
stock has fallen about 8 percent this year to Wednesday's close.
(Editing by Kirti Pandey)