Department store chain Sears Holdings Corp. (SHLD), Thursday reported a swing to loss in the first quarter from a profit last year, as last year's results mainly reflected hefty gains from asset sales. Adjusted loss for the period widened, due mainly to weak sales and margins. Shares of the company plunged 12 percent in after-hours trade, following the announcement of results.
Sears Holdings, which operates namesake stores and Kmart brand, said its first-quarter revenues declined to $8.45 billion from $9.27 billion a year ago.
Sears Holdings attributed the decline in revenues to fewer Kmart and Sears Full-line stores in operation, lower domestic comparable store sales and the separation of the Sears Hometown and Outlet businesses.
Domestic comparable store sales declined 3.6 percent in the quarter, hurt mainly by cooler spring than last year. Comparable stores sales decreased 4.6 percent at Kmart and 2.4 percent at Sears Domestic.
Hedge fund manager Edward Lampert had formed Sears Holding by merging Sears and Kmart in 2005. However, for past several years Sears Holdings have been trying to revive its declining sales, by closing down more than 100 stores, separating its Hometown and Outlet Stores business, selling off assets and shrinking its inventory and debt.
Chairman and controlling shareholder Edward Lampert had taken over the reins of the company in February after CEO Louis D'Ambrosio resigned citing family health matters.
"Our recent financial performance has not been acceptable, although we have seen some positive momentum as sales per member increased and our online business grew 20 percent in the quarter," said Lampert.
Gross margin dropped significantly to $25.5 percent from 27.7 percent last year.
Sears Holdings first-quarter loss was $279 million or $2.63 per share, compared to a profit of $189 million or $1.78 per share last year. Excluding items, adjusted loss for the quarter widened to $1.29 per share from $0.51 per share last year.
The first quarter results included gain on sale of assets of $14 million compared to a gain of $395 million last year.
Further, CFO Rob Schriesheim said the company is in the process evaluating strategic alternatives for its Protection Agreement business, including a possible sale. Schriesheim said the sale could create additional liquidity in excess of the company's minimum target of $500 million.
Last November, Sears Holdings said it would raise at least $500 million of additional liquidity in 2013.
SHLD closed Thursday's trading at $58.17, down $0.20 or 0.34%, on the Nasdaq. The stock further plunged $6.91 or 11.88% in after hours.
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