Sears plunges on ugly holiday surprise
Shares were down nearly 15% at one point after the company reported a big decline in comparable sales.
The company, repeatedly faulted for having failed to invest in its stores to attract shoppers, reported a 7.4 percent decline in quarter-to-date holiday season comparable sales. That compared with a 3.3 percent decline from analysts surveyed in a Retail Metrics poll.
Sears U.S. comparable sales tumbled 9.2 percent and sales at its Kmart unit dropped 5.7 percent. Sears Canada sales fell 4.4 percent.
The company forecast an adjusted loss in the quarter ending Feb. 1 to be $2.01 to $2.98 a share. For the year, it projected an adjusted loss of $7.64 to $8.61 a share. Analysts surveyed by FactSet were looking for profit of 38 cents a share in the fourth quarter and a loss of $6.80 a share for the year.
The company’s sales at Kmart were hurt by declines in consumer electronics, grocery and household and toys. At Sears, they were hurt by lower demand for electronics, tools and home appliances. Analysts have pointed to declines of appliances, where Sears has had the largest market share, as another example of the company losing relevance.
The latest announcement from Sears raised questions on the company, once the largest U.S. retailer, after hedge fund investor Eddie Lampert of ESL Investments, the company’s largest shareholder, merged the department store chain with Kmart in 2005. Lampert has shot back at critics about his reluctance to invest in stores, adding those efforts haven’t proven worthwhile. Instead, he’s been focusing investments on its loyalty member Shop Your Way program and online sales.
"We are transitioning from a business that has historically focused on running a store network into a business that provides and delivers value by serving its members in the manner most convenient for them: whether in store, in home or through digital devices," the company said in a statement Thursday, adding the reward program members represented 69 percent of its sales during the holiday season, up from 58 percent last year.
Lampert also has been selling different assets and is considering separating the company's Lands' End and Sears Auto Center business as he raises more cash to make up for the company's decreasing cash flow. However, analysts have questioned what will be left at Sears once it sells its most valuable assets.
"The results that we posted are not nearly what we want them to be," Lampert said in a statement on the company website, adding Sears has spent hundreds of millions of dollars on initiatives including Shop Your Way and on the digital front. "We see signs that it is working. We've had consistent annual digital growth and significantly-increased engagement from Shop Your Way members.
"The fact that these results are obscured by our overall performance doesn't make them any less real or any less central to the needed transformation of our company. They also overshadow all of the work that’s being done."
A full-throated defense -- and one that wasn’t able to curb the stock rout or the company’s vocal online critics.
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Eddie Lampert, I do have some things to say to you. You're focusing on loyalty shopping and online shopping?
Got news for you buddy, if YOU want LOYAL shoppers; CLEAN UP YOUR STORES!!!! When the average Sears store makes WALMART look clean and high end, YOU have a problem. NOBODY is going to become a loyal shopper, with dirty, out-of-date stores, and merchandise that looks shoddier every year.
Now, for focusing on online sales and shopping? Are you out of your mind? Amazon and a score of others have got you BEAT before You've even STARTED! The ONLY way for you to compete online, is in in-store pickups. That way the customer can come in and pick up his purchase, and NOT have to deal with RUDE, COMMISSION-HUNGRY salespeople and wait for them to WAIT on him and try to push more crap that they don't want onto them.
As for Lands End, the BEST thing that could be done is to sell it and let it become a good company again. Lands End was an awesome company, and then Sears got hold of it.
As for Sears Auto Centers, the best thing you can do is close them!! Their reputation has gotten so bad in the last 35 years, that seems to be to only option. ANYTHING you sell at the auto stores can be bought QUICKER and EASIER and CHEAPER ANYWHERE else.
Haven't done a dime's worth of business with Sears since 1989.
Customers remember being treated badly. I sure remember, it was over an $0.89 battery clamp. Hope it was worth it Spartnaburg, SC Sears store.
Lampert is an idiot. I WILL NEVER shop at SEARS again - DUE to his conversion to his "membership" shop your way thing. I do not need to be in yet another database to get 20% off during a sale.
What does he think SEARS is, COSTCO? NO, it is a general lines retailer. Nearly all of its product offerings (or comparable items) are available from other retailer. Craftsman tools are even in ACE Hardware stores. Dockers can be bought at several stores. electronics, SEARS was never competitive, Fry's, best buy, etc. have always been cheaper. Appliances are all that is left. I can buy Kirkland brand washers, or go to Lowes for Maytag...
MEMBERSHIP? for WHAT??? Nope, I will never shop there again.
I used to frequent Kmart at least once a week, and since it was bought out by Sears, I've noticed, that a lot of the merchandise that use to be there has changed to junk. The store has turned into a place where Sears dumps the stuff that don't sell in their stores.
The prices went up and it's actually cheaper to buy a lot of stuff in a normal grocery store.
Wise up Anrdria Cheng of MSN Money Partner! Have you shopped at sears during the past several years?
Obviously you have not, otherwise you would NOT be surprised. The only time I go to Sears now is for
a tool. Last year I went to Sears for a motorcycle battery. They had only a pitiful selection. The clerk
told me to go on line. Isn't Sears supposed to be noted for its tires and batteries, apparently, no longer.
Also other articles regarding Sears stated that they expect Sears to essentially liquidate. their CEO is
milking the business and putting the money, Who knows where. It is obviously NOT into inventory
good customer service or store maintenance.
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Specialty apparel is doing incredibly well, with fantastic growth and terrific gross margins.
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