Broadline retailer Sears Holdings Corp. (SHLD) reported Monday a net loss for the first quarter that narrowed from last year, despite a revenue drop, reflecting improved gross margins, lower depreciation and amortization expenses as well as higher gain from asset sales.
"During the first quarter, we made significant progress in our transformation from a traditional, store-network based retail business model to a more asset-light, member-centric integrated retailer leveraging our Shop Your Way platform," President and CEO Edward Lampert said in a statement.
The Hoffman Estates, Illinois-based retailer reported a net loss of $303 million or $2.85 per share for the first quarter, narrower than $402 million or $3.79 per share in the prior-year quarter.
Excluding items, adjusted loss for the quarter was $2.00 per share, compared to $2.03 per share in the year-ago quarter.
Total revenues for the quarter decreased to $5.88 billion from $7.88 billion in the same quarter last.
The company attributed the decline in revenue to the loss in revenue of $697 million associated with Sears Canada, which was de-consolidated in October 2014, $222 million from the separation of the Lands' End business, which occurred in the first quarter of 2014 and $501 million as a result of fewer Kmart and Sears Full-line stores.
Comparable store sales declined 10.9 percent, comprised of a decrease of 7.0 percent at Kmart and a decrease of 14.5 percent at Sears Domestic, which contributed to $558 million of the decline.
Gross margin rate improvement of 260 basis points to 25.8 percent was partially offset by a 210 basis point increase in selling and administrative expense as a percentage of total revenues.
Depreciation and amortization expenses declined to $122 million from $155 million, while gain on sales of assets totaled $107 million, higher than $46 million a year ago.
The company said it continues to make progress towards the formation of Seritage Growth Properties, a public real estate investment trust or REIT, and its subsequent purchase of properties from the company.
The expects that it will be declared an REIT effective by the SEC later in the week, and are targeting to launch the rights offering on Friday, June 12, 2015, which, if successful, will result in $2.6 billion in cash proceeds to Sears Holdings.
The company expects to be more productive with its physical store space with the completion of the joint venture transactions with three leading shopping mall owners and operators, and the advanced formation of the Seritage REIT.
SHLD closed Friday's regular trading session at $40.74, down $2.59 on a volume of 1.51 million shares.
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