Shares of struggling retailer Sears Holdings (SHLD, Financial) dropped 12.6% Thursday following the release of its financial results for the first quarter.
Sears posted a net loss of $424 million, or a $3.93 loss per share, versus $245 million or $2.29 loss per share in the first quarter a year earlier. The 2017 quarter included a gain of $492 million from the sale of its Craftsman brand. Analysts were expecting a net loss of $1.51 per share.
Revenue fell to $2.9 billion from $4.2 billion, with Sears saying that store closers accounted for two-thirds of the decline. Comparable store sales dropped 11.9%, including a 9.5% decline at Kmart and 13.4% fall at Sears stores. Sears said it will close more unprofitable stores by the end of the third quarter to raise money.
Sears has not had a profitable year since 2011 as it has sought to reinvent itself under hedge fund manager Eddie Lampert, its chairman and CEO. In a release, Sears said it plans to further its “strategic transformation” by focusing on its Shop Your Way membership program and integrated retail strategy while streamlining operations and lowering operating expenses.
"As we look to the remainder of 2018 and beyond, we remain committed to restoring positive Adjusted EBITDA and will continue to explore opportunities to unlock the full potential of our assets for our shareholders,” Lampert said.Â
In a conference call, Sears said it would not comment on its letter yesterday disclosing that Lampert’s hedge fund ESL Investments was seeking a partner to buy the company’s Kenmore brand and other assets.
“As part of its review, the independent special committee continues to evaluate the April 20th letter the Company received from ESL Investments expressing interest in participating as a purchaser of all or a portion of the aforementioned assets,” Sears CFO Rob Riecker said.
For the remainder of 2018, Sears said it will continue to try to sell assets including the Kenmore brand and its Sears Home Services, Innovel and DieHard businesses. It will also concentrate on its smaller, online-oriented physical stores.
Sears ended the quarter with $466 million in cash and long-term debt of $3.5 billion.
Sears shares traded around $2.81 on Thursday afternoon. They are down 56% over the past year.
