Iconic Sears struggles, but executives promise future growth Retail chain operator Sears Holdings Corp. announced its third quarter earnings this week, delivering weak results that missed analysts' expectations and placed additional pressure on executives to institute a turnaround.

Sears reported a net loss when it announced its third quarter results on Thursday. The Illinois-based chain said that it logged a loss of $421 million net loss in the quarter. That figure was lower than the $218 million loss the company reported in the same period in 2010.

Hedge fund manager Edward Lampert now controls Sears, but the company has failed to institute a successful business cost reduction program. What's more, sales at the retailers' Canadian stores were down in its latest fiscal quarter, exacerbating worries that Target and other retailers have usurped its business.

Though Sears was once a popular and trusted brand, its reputation has eroded over the past few years, according to marketing analysts. Target and Wal-Mart have succeeded in branding, as they appeal to the same demographic that Sears once dominated.

Sales during the company's third fiscal quarter fell 1.2 percent to $9.57 billion. Analysts had projected the company would log a loss, but Sears surprised with the hefty reduction in revenue as well. Bloomberg reports the retail chain has reported 19 consecutive quarterly declines in revenue, underscoring the seriousness of the troubles that plague its business model.

In an effort to drive business higher, Lampert and other executives are working to emphasize the chain's smaller stores. Moreover, they are hoping to attract shoppers to the company's online site and have licensed the Sears' brands to other firms in an attempt to bolster earnings.

The company's stores in the U.S. fared better than their counterparts in Canada. Sales at U.S. stores fell by 0.7 percent; while sales at U.S. Kmart stores – which Sears also owns – dropped by 0.9 percent. In Canada, comparable store sales declined by 7.8 percent in the quarter, according to the company.

"While we are not satisfied with our performance, we saw improvement in some core areas. Sears Full-line Stores saw improvement, as Sears apparel achieved both comparable store sales and margin rate increases in the quarter," Sears chief executive Lou D'Ambrosio said in a statement.

"We also saw nearly 20 percent growth in our domestic online business, and while appliance sales declined in the quarter, we improved our market leadership positions in overall appliances and Kenmore. Despite improvement in these areas, our overall results were down, led by declines in Sears Canada, consumer electronics and Kmart apparel," he added.

D'Ambrosio's background is in technology, as he has held positions at International Business Machine Corp. (IBM) and Avaya Inc. He is endeavoring to drive Ecommerce sales higher, and has succeeded thus far, as revenue from the company's online site continues to soar.

However, he and Lampert are also trying to ratchet up earnings in the company's core assets. Executives are also working to institute business cost reductions as they fight higher raw materials prices, and analysts said they could be mulling whether to close a number of underperforming stores both in the U.S. and Canada.

After Sears announced its earnings, shares of the company declined by 6.3 percent, according to Bloomberg. The shares had dropped as much as 9.1 percent earlier in the day, representing the steepest intraday fall since early August.

Share To:

Strategic Sourceror

Post A Comment:

0 comments so far,add yours