Sears (NASDAQ:SHLD) enjoyed some publicity at the end of November, when it was the earliest retailer to open its doors on Thanksgiving (6 a.m) to kick off the holiday shopping season, but it looks like the retailer’s ambitious efforts didn’t exactly pay off. Sears reported Thursday that it saw declines in comparable-store sales at its Kmart and Sears namesake chain for the lucrative holiday season.
Sales declines at Sears and Kmart stores aren’t entirely unexpected, considering the Chicago-based retailer already posted sharp declines in the third quarter. Reuters reports that Sears’ holiday sales figures were even worse than those released for its third quarter. Sears CEO Edward Lampert said on his blog, “The results that we posted are not nearly what we want them to be.”
A retailer’s comparable sales, or sales at stores open at least one year, are considered a good indicator for a company’s overall health. Sears reported Thursday that at its U.S. stores, same-store sales were down 9.2 percent in the nine weeks ended January 6. Sales at its discount Kmart chain were down 5.7 percent. Lampert has been working to reverse Sears’ downward sales spiral since sales started falling at the company in 2005, but it is clear the fruits of the CEO’s labor haven’t paid off yet. Shares of Sears were down 13.35 percent, sitting at $36.88, as of 10:30 a.m. Eastern on Friday.
According to Reuters, ever since Lampert merged Sears and Kmart in an $11 billion deal in 2005, the company’s executives have decided to begin closing both thriving and struggling stores in the U.S., operating under the understanding that the closure and sale of real estate will result in much-needed cash. The company has sold almost a dozen stores in the U.S. and Canada over the past 18 months, and it has closed about 300 U.S. stores since 2010. Sears now has about 2,000 Sears and Kmart locations in the United States.
Many investors and analysts have been unhappy with Lampert’s strategy because many of the stores that he has decided to close were thriving at the time of their shutdown, and some were even located in the country’s thriving malls. However, when doubted, Sears U.S. spokesman Howard Riefs insisted to Reuters that most of the U.S. Sears stores that have been closed since 2010 were performing poorly and that less than 2 percent were in good locations with good performance.
Nonetheless, analysts have been hard on Sears’ fundraising approach. Mary Ross Gilbert, a managing director at investment bank Imperial Capital, said to Reuters, “They’re not focused on executing at retail so that’s why we’ve seen the business deteriorate.” Imperial has an underperform rating on Sears and a sell rating on its 6-5/8 percent bonds.
Retailers everywhere forged an aggressive holiday season battle this year, going into the season knowing that it was six days shorter than normal; industry researchers had already offered poorer-than-expected sales predictions. Many big-box companies shocked consumers when they made the decision to turn Thanksgiving into Gray Thursday and open early on turkey day. Kmart was one such company that opened at 6 a.m. and stayed open for 41 hours, drawing the criticism of many.
In recent months, Sears has focused its retail strategy on its promotions that are fed via digital and social means that target members of its “Shop Your Way” rewards program. The loyalty program was what Lampert placed all his bets on for the holiday season, but it doesn’t appear to have drawn in as many customers as the CEO would have hoped, according to Reuters.
Sears now expects to post a loss of between $11.85 and $12.88 per share for the fiscal year ending February 1. That figure accounts for a loss of $2.35 to $3.39 per share for the holiday quarter. Lampert also maintains that he still thinks there is room for more store closures.