Sears sees first quarterly profit in almost two years but sales still suffer
At last! Sears Holdings Corp reported its first quarterly profit in almost two years Thursday, as the struggling retailer undertakes a $1.25bn cost-cutting plan amid concerns about its ability to continue as a going concern. Still, its shares rocketed 32.5% yesterday, albeit from a low base, to $8.43.
Net income came in at $244m/$2.28 per share from a loss of $471m/$4.41 per share, a year earlier. The retail group said in April that it expected to report a net profit ranging $185m-$285m for the quarter, helped by slashing costs ($700m-worth since February) through closing stores, reducing management numbers, as well as selling off non-core assets including its Craftsman brand. Total costs in the first quarter fell to $4bn.
However, sales are still floundering. Revenues plummeted 20.3% to $4.3bn and comp sales at Sears’ US stores fell 12.4%, while those at Kmart fell 11.2% for Q1 ended April 29.
Sears CEO Eddie Lampert said on Thursday the results had “clearly demonstrated” the company’s commitment to return to solid financial footing.
Sears, which employs 140,000 people, announced in January that it would close 108 additional Kmart and 42 more Sears locations, and unveiled yet another restructuring plan in February. The company has lost more than $10.4bn since 2011, the last year that it made an annual profit.
“We recognise that we need to accelerate our efforts to improve our operational performance and are moving decisively with our $1.25 billion restructuring programme,” Lambert added.