Sears plunges on ugly holiday surprise

Shares were down nearly 15% at one point after the company reported a big decline in comparable sales.

By MSN Money Partner Jan 10, 2014 12:20PM
Sears store on in Milford, Connecticut Spencer Platt/Getty ImagesBy Andria Cheng, MarketWatch

Sears Holdings (SHLD) shares closed down nearly 14 percent Friday after it joined a slew of other retailers Thursday with downbeat holiday quarter estimates, except its guidance and Wall Street estimates were miles apart.

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. 

More from MarketWatch

Tags: SHLD
Jan 10, 2014 1:31PM

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.

Jan 10, 2014 1:58PM
Sears screwed themselves years ago by doing what many companies do - hire young, inexperienced people for less money with zero experience.
Jan 10, 2014 1:57PM
I just went to sears before Christmas.  I got about 6 different receipts, got flung the "reward" crap and "loyalty" crap.  Was offered arbitrary insurance plans.  No one could answer my questions.  

I JUST WANT TO BUY MY STUFF AND LEAVE!  STOP making me dread going to your place of business.  It's a chore!
Jan 10, 2014 1:06PM
I can see why. Recently I went to a Sears Store and I had to figure out for myself where the product I was looking for was located. Nobody around to take care of the Customers.

Jan 10, 2014 2:17PM
My biggest problem with Sears, and detraction from shopping there, is that the majority of their Craftsman products are now made in China. I used to shell out money to buy Craftsman because it meant quality and made in the USA. Not anymore. Craftsman products are the same price, but without the quality and US jobs.
Jan 10, 2014 2:18PM
sears  got what they deserve.  at one point in my life everything I owned was from sears, but last year I purchased a lawn tractor and purchased the extended in home warrantee.  It was important to me since I cut about 3 acres of grass and in the summer it's twice a week just to keep up.  after the tractor broke down I called and they said 5 week wait for a service call.  I talked to supervisor after supervisor - - no help.  I took it to a local repair shop and had it back in less than 24 hrs.  I WILL NEVER PURCHASE ANYTHING FROM SEARS AGAIN  BYE
Jan 10, 2014 2:04PM
Walking into a Sears is like stepping into a time machine and falling back 20 years.  They literally have done NOTHING at all to try to keep up with anyone else.  
Jan 10, 2014 2:03PM
Sears has let go of the basics in retail.  Nowadays you can go to a Home Depot and buy the same applicances Sears sells for a lot less, especially when they are on sale.  Sears used to have great appliance prices, but go to a Sears appliance store today and the sales people are trying to get you to buy the $2,000 washing machine and do not want to talk to you about anything else.  And, if you do buy an appliance, trying to get it delivered from Sears is like running an obstacle course.  Other stores ask you when YOU want it delivered.  Sears tells you when THEY will deliver it.  See the difference.  Just go back to value, quality, good pricing and customer service.  And, I agree about Land's End.  Since Sears got a hold of it, the quality of the merchandise went down, but the price remained the same.  Land's End today does not carry quality merchandise. 
Jan 10, 2014 2:03PM
Sears should get rid of everything except Appliances and tools.  Kmarts' Holiday ads had to be the stupidest ads of the season. People shaking around like idiots(twerking, jerking, whatever they called it) and nothing about what was on sale or any useful info.  That ad agency should be fired!
Jan 10, 2014 1:59PM

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.


Jan 10, 2014 2:01PM
This company needs to work on service.
Jan 10, 2014 2:04PM
I went into Sears twice between Nov 15 and Dec 20th.  Both times the lines were SO LONG, one lady told me she'd been waiting for 30 minutes already!!  I put the stuff back and walked out.  The lines were absolutely ridiculous in EVERY department.  Jewerly counter?  Well, they weren't busy, but would not check anyone out there, lady said "we're not 'llowed to check out other departments.  uh huh...sure.  Lazy cow.  When I said I'd checked out in jewerly many times before, she said "well, I don't do it:".  Stupid.  Wont go there again. 
Jan 10, 2014 1:59PM
I'm sorry but why would I choose to shop at Sears when I have at least 10 stores just like it within a 10 mile radius. To be frank, none of these stores has anything better to offer than the other, their all the same really. If its cheaper at the other store, I'm going there. Screw customer service, it's all but lost anyway. I've always had to do most of the leg work myself, nothings changed.
Jan 10, 2014 2:05PM

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.

Jan 10, 2014 2:07PM
sears needs a new and EXPERIENCED CEO! , lampert doesn't know anything about running a retail company its obvious . Screw that stupid shop reward crap!  you don t need members you need customers it isn't a country club . Sears needs to get back to the basics . it needs better prices better customer service,not freaken members WAKE UP LAMPERT!
Jan 10, 2014 2:02PM

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.

Jan 10, 2014 2:07PM
Not unexpected. Due to their service and the way that I was personally treated by Sears I quit buying from them about 2 years ago. I am surprised that they have stayed in business this long,
Jan 10, 2014 2:05PM

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.

Jan 10, 2014 2:21PM
I call this Karma.  Sears is one othe worst, unethical corperations out there.  They have screwed over and bought out so many companies, that it is coming back to haunt them. 
Jan 10, 2014 1:59PM
Once a retailer is trending is very difficult to reverse that trend....Not many do that. There must be drastic change...and not change the way JCP did it....
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