Sears Earnings Report: Struggling Sales, Narrower Loss

Sears Earnings ReportOn Monday, June 8, Sears Holdings Corporation (NASDAQ/SHLD) announced its financial results for the first quarter of fiscal year 2015, ended May 2. (Source: Sears Holding Corporation, June 8, 2015.)

Revenue Down, Loss Narrowed

Revenue at the company continued to decline. It was $5.9 billion for the first quarter, down by $2.0 billion or 25.3% compared to $7.9 billion in the same quarter last year. Sears commented that a large part of the decline was due to the company’s endeavor to streamline its operations and transform into a member-centric store.

Domestic same-store sales dropped 10.9%. This includes a 14.5% decrease at Sears stores and a seven percent decrease at Kmart.

Net loss for the first quarter was $303 million, translating into a loss of $2.85 per share. The loss is narrower compared to last year, in which the company had a loss of $402 million, or $3.79 per share. The company said that the net loss in this quarter included significant one-time items totaling $90.0 million. Excluding those, the adjusted net loss was $213 million, or $2.00 per share.

Note that this is the 12th consecutive quarter in which the company reported a net loss.

By May 2, 2015, Sears had $286 million in cash. The company’s debt included short-term borrowings of $714 million, and long-term debt of $3.2 billion.

Upon the news, shares of Sears Holdings Corporation jumped up 4.20% in pre-market trading to $42.45 a share. Last Friday, the company’s stock price plunged 6.39%.

Selling Assets to REIT

Sears announced in April that it had entered into agreements to sell some of its real estate assets to Real Estate Investment Trusts (REITs) and joint venture partners.

According to the company’s recent filing to the Securities and Exchange Commission (SEC), Sears plans to sell 235 stores to a REIT called Seritage Growth Properties for more than $2.5 billion. The company also formed joint ventures with General Growth Properties, Simon Property Group, and The Macerich Company (NYSE/MAC). (Source: Securities and Exchange Comission, May 26, 2015.)