Sears Holdings (NASDAQ:
) posted a narrower second quarter loss this year than it did in
2011. Sears has cut expenses and reduced inventories in an attempt
to turn the company highly profitable once again. Merchandise
inventories fell to $8.7 billion from $9.3 billion in the second
quarter. Much of the reduced inventory is attributed to store
Investors seem to be receiving the smaller-than-expected loss as
positive news Thursday morning. Sears shares are trading higher at
$58.17, up 2.75 percent.
Sears said second quarter revenue fell seven percent to $9.47
billion, which missed Street consensus of $9.68 billion. Revenue
from stores that were opened for at least one year fell 2.9 percent
from the same period last year. Comparatively, revenue figures fell
4.7 percent for Kmart stores.
In the second quarter, Sears lost $132 million, or $1.25 per
share, for the period that ended July 28. This compares with a loss
of $146 million, or $1.37 per share, just one year ago.
The company reduced its total debt to $3.3 billion from $3.5
billion for the same period last year. Sears is reducing debt by
selling off real estate holdings, cutting advertising costs and
slicing administrative expenses through payroll.
Sears has been attempting turn its business around for years,
though there has been very little headway made through the $2
billion acquisition of apparel maker Lands' End a decade ago. The
2004 merger with Kmart has turned out to be a bust as well, as the
company is in the process of closing
100 to 120 Kmart and Sears stores
In a potentially positive turn of events,
the retailer announced this week
that it is moving forward to spin off Hometown and Outlet stores,
along with a number of hardware stores through a rights offering.
The news was well received by Wall Street investors, as the stock
climbed up 5.7 percent on Monday.
The spin off will become a publically traded company with 1,200
small stores pushing Sears product lines. Hometown accounts for
$2.6 billion of Sears' $41 billion annual revenue. Sears Chairman
Edward Lampert's ESL Investments will own a majority stake in the
business being spun off, according to the Associate Press
In an attempt to become relevant to a younger crowd last year,
Sears entered into an agreement with the Kardashian family to
design clothing and accessories in an exclusive collection. No
results have been made public pertaining to the success of the
brand on Sears's earnings.
Sears shares have traded in a broad range over the past year
with a low of $28.89 and a high of $85.90. Currently, the stock is
stuck in the middle of that range at $58.00. Retailers are riding a
wave of positive news, including yesterday's retail sales figure
for July that was up 0.4 percent, beating analyst's consensus of
Retailers Target (NYSE:
) and TJX (NYSE:
) both beat analyst estimates and also guided higher this week.
Conversely, Wal-Mart reported its second quarter revenue number
was lower than Wall Street was anticipating. The company only beat
earnings estimates by a penny. Wal-Mart shares were down 2.6
percent in early trading Thursday morning.
For Sears, the market and its current situation will keep
investors at bay. However, much of Sears' recent rise will likely
be short lived until the company provides guidance that solidifies
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