Sears Holdings Corp. (NASDAQ: SHLD) released its second quarter earnings on Thursday and beat analysts expectations in earnings and revenue.
Sears reported an adjusted EPS loss of $1.16, but still beat estimates of EPS loss of $2.48. Revenue was $4.4 billion, a decrease from last year’s $5.7 billion, but beat an estimate of $4.21 billion. Same-store sales fell 11.5 percent, worse than the expected 7.1 percent decrease, according to Thomson Reuters analysts’ consensus.
Sears said in the earnings call that the retail environment was challenging, but even though, the company was still able to beat estimates and says that July was the best month of the quarter in terms of comparable store sales performance.
Although Sears says July might have been the best month, comparable store sales overall still declined 11.5 percent. Kmart’s comparable store sales declined as well by 9.4 percent. Sears comparable sales alone declined 13.2 percent.
The company also says store closures contributed to approximately $770 million of the decline, and with reductions in the number of pharmacies in open stores and the reduction in consumer electronics assortment continuing to contribute to the company’s overall sales decline.
Sears stated in the earnings call that the company “continued to focus on streamlining its operations, reducing inventory and operating expenses, and are taking incremental actions to further improve the company's performance.”
Rob Riecker, Sears’ Chief Financial Officer said, "During the quarter, we continued to focus on actions to provide the Company with additional financial flexibility to generate liquidity and demonstrate our ability to manage our business while meeting all of our financial obligations."
Moving forward now, Sears has plans to close down 28 Kmart locations. During the 2017 fiscal year Sears announced a plan to close down a 180 stores and an additional 150 by the end of the third quarter. Sears’ plan to close down locations is a part of its restructuring plan due to real estate struggles and the company claims it has begun to see improvement in the second quarter.
Sears announced back in July that it will be working with Amazon to sell Kenmore products and believe this will be a growth opportunity for the company. The company says it will also look into more opportunities for its Kenmore and Diehard brands, as well its home services and auto services.
With all these strategic plans set and going forward, Sears has announced a plan to cut costs by $1.25 billion during the 2017 fiscal year.
"We believe our restructuring program is critical to becoming a more competitive, efficient and agile retailer moving forward," CFO Rob Riecker said on a pre-recorded conference call.
"We are making progress on the strategic priorities we outlined earlier this year and remain focused on returning our Company to profitability. The comprehensive restructuring of our operations is delivering cost efficiencies and helping drive improvements to our operating performance.” Edward S. Lampert, Chairman and Chief Executive Officer of Sears Holdings, said, “We are working towards making meaningful improvement in our performance this year as a result of the restructuring actions we have put in place, and our continued focus on the expansion of our Shop Your Way ecosystem."