Dive Brief:
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Sears Holdings Corp. narrowed its loss in Q3, but not because of revenues, which were down to $5.75 billion from $7.21 billion, but because it had fewer one-time expenses. Sears has failed to garner three straight quarters of profits since January 2008, according to FactSet data reported by the Wall Street Journal. Its profitable Q2 this year was made possible by its real estate investment trust.
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Q3 sales fell 20% on lower apparel and electronics sales and were made worse by store closings, with same-store sales down 9.6% at Sears U.S. stores and down 7.5% at Kmart. Gross margin fell to 21.9% from 22.2% as overhead costs rose to 28.3% of revenue from 27.9%.
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CEO Eddie Lampert expressed continued optimism about the retailer’s prospects, which are based in part on greater engagement in the company’s Shop Your Way membership program.
Dive Insight:
While Sears is continuing to struggle, some see its willingness to close underperforming stores a decent long-term strategy in its turnaround. There are now just 1,687 stores, down significantly from 2,249 a year ago. The company downplayed its lackluster sales in apparel and electronics, saying they are lower-margin categories.
The question for the iconic retailer at this point continues to be whether it can manage its turnaround in time.
The company still does have its strengths, including customer trust, especially with its Craftsman and Kenmore brands, which continue to outpace most other brands in name recognition and trust. (Some have even suggested that those brands could survive nicely outside of the Sears brand itself.) And, lest you think Sears is just a staid, old-fashioned brand, it was the most popular department store on Facebook over the holidays last year, with more than 12 million likes, comments, and shares, according to content marketing firm Searchmetrics.