(Reuters) - Struggling retailer Sears Holdings Corp said on Monday comparable store sales in the United States fell sharply in the second quarter, sending its shares down 8 percent to a more than three-year low.
The company, once the largest retailer in the United States by revenue, has seen comparable store sales fall for more than 20 quarters as customers preferred to shop at rivals such as Target Corp and Wal-Mart Stores Inc.
Sears’ shares were down 8 percent at $19.82 in afternoon trading.
The company said sales at U.S. stores open at least a year declined 10.6 percent in the quarter-to-date period ended July 25, mainly due to a 13.9 percent decline at Sears stores and a 6.9 percent fall at Kmart stores.
Sears, controlled by Eddie Lampert, will report on Aug. 20 results for the second quarter ended Aug. 2.
The sharp decline comes amid the company’s efforts to shrink operations, close stores and exit underperforming categories.
Same-store sales fell 10.9 percent in the first quarter, the biggest fall in five years.
Comparable sales at the retailer are expected to continue to slide at nearly the same levels for the remainder of the year, Evercore ISI analyst Greg Melich wrote in a note.
“(Sears) is flush with cash, but we expect that balance to be used to fund $1 billion plus of operating losses annually.(Sears’) “shrink to win” strategy is unlikely to result in positive cash flow, and in our view, a liquidity event is a matter of when not if,” Melich said.
Sears, however, said it expects to report a profit in the second quarter — its first in three years — as the company benefits from the sale and lease back of 235 Sears and Kmart stores to a real estate investment trust called Seritage Growth Properties it set up recently.
Hoffman Estates, Illinois-based Sears said it realized about $3 billion of proceeds from these REIT-related transactions, including from joint ventures with three mall owners and operators.
Up to Friday’s close, the stock had fallen 28 percent this year.
Reporting by Ramkumar Iyer in Bengaluru; Editing by Sriraj Kalluvila