Sears Holdings Corp., the struggling store operator was once "the" prominent fixture of the U.S. retail landscape, and once bragged that "Sears has everything," is in steep decline and a free fall. According to the company, Sears today announced financial results for its second quarter ended August 2, 2014. Net loss attributable to Holdings' shareholders was $573 million ($5.39 loss per diluted share) for the second quarter of 2014, compared to $194 million ($1.83 loss per diluted share) for the prior year second quarter. Adjusted EBITDA was $(313) million for the second quarter of 2014, compared to $(78) million in the prior year second quarter, said the Wall Street Journal.
Sears, which has shed businesses lately in a bid to refocus its operations, said slumping electronics sales continued to weigh on results, as did margin-squeezing costs from promotions. Sears claimed that without consumer electronics weighing it down, comparable store sales would have grown by 1.6 percent. However, Sears Full-line stores experienced comparable store sales growth of 0.1% for the quarter as compared to a decline of 0.8% in the second quarter of last year.
The company's Kmart stores suffered a 1.7% decline in same-store sales, also dragged down by electronics and by its grocery and household-goods business.
Edward S. Lampert, Sears Holdings' Chairman and Chief Executive Officer, put a spin on the results. "We have continued to show progress in our transformation, as demonstrated by our year-over-year increase in online and multi-channel sales, and with our member sales now representing 73% of eligible sales."
Mr. Lampert acknowledged that second quarter earnings are "unacceptable" and said "We are taking steps to address our performance on several levels. This includes reducing costs as we evolve our business model, investing in our Shop Your Way and Integrated Retail customer initiatives, rationalizing our physical footprint and improving pricing and promotions."
While Mr. Lampert continues to tout the "Shop Your Way" promotional program, he is also partially blaming the program for its troubles saying it "adversely impacts margins." Sears is now relying on its "Shop Your Way" membership program and online business to drive sales while its turnaround grinds on.
The company is targeting 130 store closures this year, with potentially more coming, while it continues to evaluate spinning off its auto-center business and divesting itself of its 51% stake in Sears Canada Inc.