Sears grows its loss; adds board members

Sears Holdings Corp. says its trend of deep same-store sales declines is slowing, but the company did report a wider loss in the fourth quarter.



For the fourth quarter ended Jan. 30, Kmart and Sears same-store sales declined 7.2% and 6.9%, respectively, which was an improvement from the trend in the first three quarters of 2015. Sears reported a loss of $580 million, or $5.44 a share, compared with a loss of $159 million, or $1.50 a share, a year earlier. Revenue dropped 9.8% to $7.3 billion.



"While our fourth quarter comparable store sales were improved over the prior three quarters and January 2016 was our best monthly comparable store sales performance of the year (-4.5%), the unseasonably warm weather and the associated competitive promotional environment resulted in higher than expected markdowns and significantly lower gross margin in our key apparel categories," said Edward S. Lampert, chairman and CEO.



Consumer electronics sales struggled at Kmart and Sears, impacting the sales declines by several percentage points. Apparel, grocery and home items also saw sales declines at Kmart, while Sears saw declines in apparel, footwear, home, tools and sporting goods.



The company says it reduced expenses by approximately $150 million in the fourth quarter of 2015 as compared to the prior year fourth quarter. Looking toward 2016, Sears says it plans to take actions that will further reduce costs by between $550 million and $650 million.



The company also added two new members to its board: Bruce Berkowitz of Fairholme Capital Management and Alesia Haas, former chief financial officer of OneWest Bank, bringing the board to 10 members.



"I am very pleased to welcome Bruce and Alesia to our board," said Sears Holdings Chairman and Chief Executive Officer Edward S. Lampert. "Bruce has been a long-time investor in Sears Holdings and has been very supportive of our transformation, and he is one of the most respected businessmen in his field in the country. Alesia is an extremely accomplished financial and strategy professional, and will bring tremendous acumen and expertise to our board."



Last year Sears spun off 235 properties into a real-estate investment trust it created called Seritage Growth Properties, and it also created joint ventures that hold additional properties with three mall owners. Together, the transactions raised $3 billion in proceeds.



"We continue to have many alternatives to access capital through our existing financing arrangements and we continue to hold an asset-rich portfolio, including substantial unencumbered real estate, which affords us flexibility to fund our transformation and meet our financial obligations. We intend to continue taking significant actions to alter our capital structure, as circumstances allow, to better position Sears Holdings for success and profitability, which could include further reductions in debt or changes in the composition of our debt."