August 18, 2011 / 12:14 PM / 7 years ago

UPDATE 5-Sears disappoints again, cuts more jobs

* Loss/shr ex-items $1.13 vs Wall St loss view of $0.64

* Sales fall 1.2 pct to $10.3 bln; missing estimates

* Sears Domestic same-store sales down 1.2 pct; Kmart flat

* Cutting 250 jobs

* Shares down 6.3 percent (Adds analyst comments, recent management changes, new exclusive apparel lines, graphic, share movement)

By Dhanya Skariachan

NEW YORK, Aug 18 (Reuters) - Sears Holdings Corp’s (SHLD.O) quarterly loss almost quadrupled as the retailer failed to stop its prolonged sales decline even as it offered more margin-sapping discounts.

The news pushed down shares of the parent of the Sears department stores and Kmart discount chain to their lowest level in two years.

Sales at Sears Holdings have fallen every year since 2005, when billionaire investor Eddie Lampert formed the company by merging the two chains.

“Essentially, the message from consumers to Sears is “we will shop there, but not at the prices you wish to charge as we won’t pay full price for substandard service and unwelcoming physical facilities,” Credit Suisse’s Gary Balter said.

Sears shares were down 6.3 percent at $56.34 after touching a low of $56.02.

The retailer, home to brands such as Craftsman tools and Kenmore appliances, is a victim of the weak economy and stiff competition as well as its own problems.

Analysts have criticized Sears for relying too heavily on cost-cutting to boost profit, rather than upgrading its stores and improving its customer service.

It faces tough competition from retailers including Home Depot Inc (HD.N), Lowes Cos Inc (LOW.N), Wal-Mart Stores Inc (WMT.N), Target Corp (TGT.N) and Best Buy Co (BBY.N). It has been losing market share in appliances and apparel.

(For a related graphic, click

Sears has made some decent investments in its Internet offerings, but has fallen well behind the other rivals on other fronts, Balter said.

The retailer has also been revamping its management team. It recently named former Hewitt Associates Chief Financial Officer Robert Schriesheim as its CFO and former FreshDirect executive Monica Woo as its new chief marketing officer. Former Avaya Inc [AVXX.UL] CEO Lou D’Ambrosio joined Sears as its CEO in February, ending the company’s three-year search for a new chief executive.

Sears Holdings has had trouble hiring executives since Lampert is seen as being difficult to work with and does not want to pay too much, Morningstar analyst Paul Swinand told Reuters in early August.


Higher costs also hurt Sears Holdings, which said it would lay off about 250 employees in support and field roles.

The news on Thursday came two months after the retailer laid off 700 employees who worked in the appliance section of its Kmart stores.

It is also closing 29 stores and seven product repair center locations, while converting 14 Sears Grand stores to Kmarts. The company said there could be more job cuts from those actions.

In the second quarter, sales fell 1.2 percent to $10.3 billion, while analysts expected $10.5 billion. Sales at U.S. stores open at least a year fell 0.7 percent, with those at the namesake stores down 1.2 percent and Kmart staying flat.

The company blamed the lackluster sales numbers on weak demand for consumer electronics at both Sears and Kmart.

It took bigger discounts to boost sales of appliances, apparel and home goods. Sears is now trying to boost traffic by rolling out exclusive apparel brands with TV celebrities such as the Kardashians and Sophia Vergara.

The net loss at Sears Holdings widened to $146 million, or $1.37 a share, from $39 million, or 35 cents a share, a year earlier. Excluding items, the loss was $1.13 a share. Three analysts on average were expecting a loss of 64 cents, according to Thomson Reuters I/B/E/S.

It noted selling and administrative expenses at Sears Canada rose $53 million from last year. Earlier this week, Sears Canada Inc SCC.TO reported a quarterly net loss, compared with a year-earlier profit. Sears Holdings owns a 93 percent stake in Sears Canada. (Reporting by Dhanya Skariachan; Editing by Lisa Von Ahn, Dave Zimmerman)

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