Closings of stores to go on for Sears

Rivals, decrease in 2Q sales cited

NEW YORK -- Sears continued to struggle in its second quarter with declining sales amid heightened competition from Amazon to Wal-Mart and said it will close even more stores.

The retailer, headquartered in Hoffman Estates, Ill., operates Sears and Kmart stores. It has been trying to cut costs by closing stores, including 180 this year and already had plans to cut another 150 stores. It now plans to shutter an additional 28 Kmart stores.

"The retail environment remained challenging," Sears Holdings Corp. said in a statement.

The company reported Thursday that its second-quarter loss narrowed to $251 million, or $2.34 per share. Losses, adjusted for one-time gains and costs, came to $1.16 per share.

Revenue fell 23 percent to $4.37 billion in the period. Sales at stores open at least a year, a key measure of a retailer's health, dropped 11.5 percent. At Kmart, the measure dropped 9.4 percent, while at Sears stores, that figure was down 13.2 percent.

Chairman and Chief Executive Officer Edward Lampert, whose hedge fund has forwarded millions in funding to keep Sears afloat, has long pledged to turn the company's fortunes around and said the retailer would find ways to capitalize on its best-known brands such as Kenmore appliances and DieHard car batteries, as well as its vast property holdings.

Last month, it began selling its appliances on Amazon.com, including Kenmore smart appliances that can be synced with Amazon's voice assistant, Alexa. The announcement that day sent shares of Sears soaring.

But Sears is battling challenges on all fronts. Like many department stores, Sears is feeling pain as shoppers change their preferences and behavior. But analysts say Sears has much to blame for its woes. While Sears has ramped up online services, it's having a hard time disguising its age. Stores are in need of a major makeover. And old rivals have made it tougher as they aim to compete with online leader Amazon.com, which is pushing ahead with innovative services as part of its Amazon Prime membership.

A number of chains such as Wal-Mart and Target have been sprucing up their stores. J.C. Penney put back on its floors major appliances more than 30 years after abandoning the sale of refrigerators and stoves. And Wal-Mart announced this week that it is joining forces with Google to offer hundreds of thousands of items for voice shopping through Google Assistant as it tries to challenge Amazon's Alexa-powered Echo devices.

While Sears said in a pre-recorded transcript that it was seeing "significant progress" in its transformation, analysts see a different picture.

"As much as Sears deserves credit for the various actions it has been taking to shore up the company, there is no denying that this is a miserable set of numbers," wrote Neil Saunders, managing director of GlobalData Retail in a report published Thursday. "Indeed, the precipitous drop in comparable sales and the continued lack of progress on profit suggests the company isn't moving far or fast enough to ensure its long-term survival."

In March, Sears said there is "substantial doubt" it could continue as a viable concern, with intense pressure coming from companies like Wal-Mart, Target and Amazon.com. It has insisted that its actions to turn around its business should help reduce that risk.

The company said Thursday that it has used about $605 million of its $1.5 billion revolving credit facility due in 2020. Its cash balances were $442 million as of July 29.

Sears Holdings Corp. shares fell 2 cents to close Thursday at $8.55.

Business on 08/25/2017

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