Sears’ woes mount; exploring options for key brands
As Sears Holdings Corp. continues to struggle to turn its business around, the chain announced it is exploring ways to expand distribution of its key brands outside its own stores. The troubled retailer also announced its CFO is leaving.
Sears lost $471 million in its first quarter, ended April 30, compared with $303 million in the year-ago period. Loss per share came to $4.41, or $1.86 adjusted for certain items. Analysts estimated a loss of $3.20 per share.
Total revenue fell from $5.88 billion to $5.39 billion, which was still better than analysts expected. Part of the decline was due to the fact that there were fewer Sears and Kmart stores in the quarter as the retailer continues to shutter locations.
Same-store sales fell 6.1, falling 5% at Kmart stores and 7.1% at Sears locations.
"Our operating performance still remains well below our goals," stated chairman and CEO Eddie Lampert. “Our Sears Domestic and Kmart apparel businesses continue to be negatively impacted by a heavily promotional competitive environment."
Sears said it plans to consider options for its popular Kenmore, Craftsman and DieHard brands, along with its Sears Home Services repair business, that could include partnerships or other deals to expand their distribution and service offerings. It offered no other specifics other than saying It has hired Citigroup Inc. and LionTree Advisors to assist in its efforts, and intends to “aggressively evaluate” all of the potential alternatives. Some reports speculated that the options could include licensing or even selling off one or more of the brands.
“Our iconic KCD (Kenmore, Craftsman and DieHard) brands are beloved by the American consumer and we believe that we can realize significant growth by further expanding the presence of these brands outside of Sears and Kmart,” the retailer stated. “Similarly, our SHS business, which is the nation's leading provider of in-home services has greater potential than what we have delivered in the past.”
The retailer also announced that its CFO, Robert Schriesheim, plans to leave the company to focus on “other business interests and pursue other career opportunities.”
According to a report by thestreet.com, Schriesheim has been the architect of Sears’ creative cash-raising efforts, including spinning off real estate to securing more debt by pledging valuable store assets
Schriesheim has agreed to stay with Sears until a replacement is found. He will also continue as an adviser to Sears through Jan. 31, 2017.