Sears Announces Plans To Close Another 28 Kmarts As SSS Drop 11.5%

Shares of Sears Holdings (SHLD) gained in morning trading after the company’s results were better than analysts were expecting despite a decline in comparable store sales. Sears also announced plans to close an additional 28 Kmart stores.

EARNINGS: Before the market open, Sears reported an adjusted loss per share for the second quarter of ($1.16), which beat analysts’ ($2.48) consensus. Revenue for the quarter of $4.365B also beat estimates of $4.21B, but comparable store sales declined 11.5%. Kmart comparable store sales decreased 9.4%, with a 6.8% decline excluding the impact of the consumer electronics and pharmacy categories, while Sears comparable store sales declined 13.2%, with a 12.1% decline excluding consumer electronics category, the company said. Sears said in a statement that the retail environment “remained challenging” in the quarter, noting softness in store traffic and elevated price competition. Chairman and CEO Edward Lampert said that the third quarter has historically been Sears’ most difficult quarter over the past few years, the company is “encouraged” that July was the best month of the quarter in terms of SSS performance.

COST-CUTTING EFFORTS: Lampert said the company is making “significant” progress in its restructuring program. Earlier this year, Sears said there was “substantial doubt” related to its ability to continue as a going concern. The company cited its cost cutting efforts, as well as debt financing actions in the filing. In May, Sears reported a smaller than expected quarterly loss, saying that while Q1 was challenging, it was committed to returning to “solid financial footing.” Sears has been trying to cut costs by closing stores, and said that so far this year, it has closed about 180 stores previously announced for closure and an additional 150 stores previously announced for closure are expected to be closed by the end of the third quarter. Additionally, Sears announced plans today to close an additional 28 Kmart stores “later this year.” Sears said on its earnings call that it is “committed” to evaluating strategic options across its real estate portfolio to unlock value, including in-store partnerships and sub-division opportunities.