Sears stock falls on quarterly loss

Shares down $7.92 after report of $279 million slide

Sears Holdings Corp. representative Joanna Van Brandt (right) speaks with a job seeker at a job fair at San Antonio in March. The company posted a $279 million first-quarter loss on Thursday.
Sears Holdings Corp. representative Joanna Van Brandt (right) speaks with a job seeker at a job fair at San Antonio in March. The company posted a $279 million first-quarter loss on Thursday.

Shares of Sears Holdings Corp., the retailer controlled by hedge-fund manager Edward Lampert, fell the most in six months on Friday after posting a $279 million first-quarter loss.

Sears shares plunged $7.92, or 13 percent, to close Friday at $50.25 after earlier sliding as much as 19 percent for the biggest intraday decline since Nov. 16.

The shares had advanced 41 percent this year through the close of regular trading Thursday, compared with a 16 percent gain for the Standard & Poor’s 500 Index.

The first-quarter loss of $2.63 a share compared with profit of $189 million, or $1.78 a share, a year earlier, the Hoffman Estates, Ill.-based company said Thursday in a statement. Revenue fell 8.8 percent to $8.45 billion.

Lampert, who took over as chief executive officer in February, said in the statement that the company’s performance “has not been acceptable.”

Since the beginning of last year, Sears has sold stores and spun off smaller format locations as Lampert puts an increased emphasis on the customer-rewards program, saying the retailer’s future is as a “membership company.”

More than half of Sears’ sales come from customers in its Shop Your Way loyalty program.

The company said Thursday that it’s evaluating options for its Protection Agreement warranty business, including a possible sale.

A 2 percentage-point increase in the payroll tax and cold weather also hurt sales in the quarter, Chief Financial Officer Robert Schriesheim said on a conference call.

The company’s 3-yearold rewards program, which Sears said has tens of millions of participants, is becoming increasingly important as the company works to revive sales, which have now fallen for 25 straight quarters.

Shop Your Way generated more than 60 percent of revenue at Sears and Kmart stores, according to the statement.

Lampert succeeded Lou D’Ambrosio as the company’s fifth CEO since merging Sears Roebuck & Co. and Kmart Holdings Corp. eight years ago.

D’Ambrosio cut inventory and debt and focused on analyzing data from the company’s tens of millions of loyalty-program customers to increase sales.

He stepped down after less than two years for a family health matter.

Lampert and his RBS Partners LP fund together held about 55 percent of the company’s shares as of April 30 and March 31, respectively, according to regulatory filings.

Lampert saw the value of his controlling stake fall as much as $639 million.

The decline in shares Friday reduced the value of Lampert’s holding to about $2.8 billion from $3.43 billion.

Lampert agreed to serve as CEO on a salary of $1 a year, effective Feb. 1, according to a regulatory filing in March.

During the first three years of his tenure, he’ll participate in the company’s annual incentive plan with a target payout of $2 million a year.

Lampert will also receive $4.5 million in Sears stock a year, according to the filing. Information for this article was contributed by David Carey of Bloomberg News.

Business, Pages 29 on 05/25/2013

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