- After posting a rare profit in 2017's fourth quarter, Sears Holdings on Thursday reported a net loss of $424 million, down from net income of $245 million in the year-ago period. The department store retailer's net revenues fell 31% year over year, to $2.89 billion. Comparable sales fell by 11.9%, accounting for about 22% of the decline in top-line sales, with store closures accounting for most of the rest, according to the company's earnings report.
- Also on Thursday, Sears said it plans to close 72 stores in "the near future," the company said in a press release. Those stores are among the approximately 100 stores Sears recently identified as "non-profitable." In a press release and recorded statement by Chief Financial Officer Rob Riecker, Sears indicated it was turning its attention to its remaining "best stores." Riecker said that the company expects to close the non-profitable stores by the end of the third quarter.
- Riecker said that the retailer's selling and administrative costs had decreased by $315 million in Q1 compared to the prior-year period, which he attributed to the company's cost-cutting efforts in 2017 and this year, according to a transcript of his statement. Even with the decline in costs, Sears in Q1 was operating at a $217 million loss, compared to its operating profit of $349 million last year.
Sears continues to far outpace its department store peers in store closures. So far, the moves still haven't plugged the outflow of money from the company. Worse, the retailer's sales base, seen in its comps, continues shrinking.
Moody's Vice President Christina Boni said in comments emailed to Retail Dive that Sears "continues to struggle to bring its business to profitability."
"The additional 100 store closures announced today is another effort to streamline in the face of its shrinking core operations," Boni said. "Its continued efforts to enhance liquidity will be necessary to fund its ongoing operating losses."
Those efforts to boost liquidity are many. Sears has signed a deal with Citi on the retailer's branded credit card that brought Sears more than $400 million. It has exchanged debt. It has auctioned off store properties online. It has borrowed from its CEO's hedge fund. And it is also contemplating selling off major assets, including the Kenmore brand, to the fund as well.
For now, all those proceeds are funding the company's losses. That's a problem when other retailers that compete with Sears in apparel or appliance sales are investing in their businesses.
There were some bright spots in Q1, though. Riecker said comps increased in apparel, footwear and jewelry at both Sears and Kmart. Sears has also expanded its partnership with Amazon to sell products and services. But so far, those bright spots haven't been enough to change the retailer's basic trajectory.
Riecker and CEO Eddie Lampert have both projected optimism in Sears' retail turnaround, even as comps continue shrinking. "Our transformation strategy is designed to make Sears Holdings a new kind of retailer — one that is innovative, truly integrated and optimally positioned to meet the needs and preferences of today's shoppers," Riecker said Thursday. For now, analysts are still concerned, and shoppers don't seem to be sold.