Sears on Thursday reported a loss in the first quarter and announced its CFO was departing, but the company put a positive spin on the news by saying it was seeking to derive more value from its well-known Kenmore and Craftsman brands.
The Hoffman Estates, Ill.-based retailer reported a loss of $471 million, or $4.41 a share for the quarter that ended April 30, compared with a loss of $303 million, or $2.85 a share, a year earlier. Excluding certain items, Sears’ adjusted loss was $1.86 a share.
Revenue fell 8.3% to $5.39 billion, primarily driven by a 6.1% decline in comparable store sales during the quarter. That drop accounted for $268 million of the revenue decline. Having fewer Kmart and Sears stores in operation accounted for $149 million of the fall, Sears estimated.
“Our Sears domestic and Kmart apparel businesses continue to be negatively impacted by a heavily promotional competitive environment,” Sears’ chairman and chief executive Edward S. Lampert said in a press release. “We continue to focus on improving the overall performance of these businesses through changes to our assortment, sourcing, pricing, and inventory management practices.”
Sears said the company’s board will explore increasing the availability of Kenmore, Craftsman, and DieHard products outside of Sears and Kmart stores. The company also said that its Sears Home Services business “has greater potential than what we have delivered in the past.” Sears said it would evaluate “potential partnerships or other transactions” to expand distribution and service offerings for Sears Home Services and the trio of well-known consumer brands. One of the options is an outright sale of some or all of those assets.
Sears also announced that its CFO Robert Schriesheim would be departing the company “to focus on his other business interests and pursue other career opportunities.” Schriesheim will remain at Sears until a replacement is named and will remain an adviser to the company through Jan. 31, 2017.
In the earnings press release, Sears maintained that it has plenty of liquidity and sellable assets to finance its “transformation strategy.”
Though Sears has utilized $896 million of its $1.97 billion revolver as of April 30, the company also has $286 million of cash on hand, a $750 million term loan, and a $500 million secured loan facility.
“When considered together with our previously announced intention to monetize at least $300 million of assets, [these recently closed facilities] would result in an aggregate of $1.5 billion of enhanced liquidity,” Schriesheim stated.