Sears Holdings Warns on Fourth-Quarter Sales
09 February 2016 - 11:40PM
Dow Jones News
Sears Holdings Corp. warned Tuesday that its fourth-quarter
revenue would fall short of expectations, prompting the retailer to
accelerate store closures and make deeper cost cuts.
Shares in the company, down 49% over the past 12 months,
declined 3.4% in premarket trading.
The Hoffman Estates, Ill.-based retailer, which has been
struggling to transform itself and return to profitability, said it
expects to report $7.3 billion in sales for the quarter ending Jan.
30, down from $10.59 billion a year earlier and below the $7.43
billion analysts polled by Thomson Reuters have projected. Sales at
existing stores dropped 7.1% in the quarter, pushed lower by a 6.9%
drop in domestic Sears stores and a 7.2% decrease in Kmart
locations.
"The holiday selling season proved to be challenging," Sears
said, with warm weather and "intense competition" pressuring
margins and driving sales declines, particularly in its apparel
segment.
Based on the disappointing performance during the quarter, Sears
said, it will speed up the shuttering of unprofitable stores and
look to further reduce costs. The company has recently flagged 50
stores for closure in the coming months and suggested Tuesday that
it may raise that number. It also said it is targeting at least
$300 million of other asset sales during the first half of its 2016
business year—including a possible sale or partial divestiture of
its Sears Auto Center business, which it had previously said it was
evaluating.
The company added that it is evaluating overall staffing levels
but stopped short of announcing layoffs. Steps announced Tuesday
would shave an additional $550 million to $650 million off of
expenses, Sears said.
Sears isn't alone in announcing cost-cutting actions in the face
of a disappointing holiday shopping season. Macy's Inc. last month
said it would slash thousands of jobs, re-examine its real estate
holdings in markets including New York and San Francisco, and close
40 stores. Wal-Mart Stores Inc., meanwhile, said it would close 269
locations globally.
Write to Lisa Beilfuss at lisa.beilfuss@wsj.com
(END) Dow Jones Newswires
February 09, 2016 07:25 ET (12:25 GMT)
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