Sears Holdings’ (SHLD) SHLD stock fell 13% after Sears announced a likely fourth-quarter loss and noting that holiday sales were weaker than anticipated.
“The results we posted are not nearly what we want them to be,” CEO Edward Lampert said yesterday in a blog post on the Sears website.
Lampert, the largest shareholder with SHLD, has for some time now been trying to right Sears’ ship. In addition to separating the Lands’ End clothing unit and Sears auto-service centers, getting rid of assets, and selling locations, Sears has been and spinning off smaller-format stores as sales continued to decline.”
The loss in the quarter ending Feb. 1 will narrow to $250 million to $360 million, or $2.35 to $3.39 a share, the Hoffman Estates, Ilinois-based company said yesterday in a statement. The net loss a year earlier was $489 million, or $4.61 a share.
Sales at stores open at least a year fell 5.7 percent in the current quarter through Jan. 6 at Kmart and 9.2 percent at U.S. Sears stores for a companywide decline of 7.4 percent.
“The numbers are atrocious,” Mary Ross Gilbert, an analyst at Imperial Capital LLC in Los Angeles, told Bloomberg. “A lot of apparel retailers were challenged in the quarter. And those that executed well were able to come out OK.”
Lampert says Sears is being robust in its strategy in a number of ways.
The 51-year-old SHLD head has pushed cash into Sears’ digital operations, social media and its Shop Your Way rewards program. With the announcement of its Q4 forecast, Sears announced that it has invested $69 million more in Shop Your Way than this time last year.
Which is great for Sears because, Sears said, members accounted for 69% of its sales during that period.
But it’s pretty obvious the minor tinkering is not enough.
As InvestorPlace Editor Jeff Reeves noted in The Slant, Sears and Lampert refuse to truly invest in their stores in the way they really need.
In fiscal 2012 (which actually follows calendar year 2011, just to confuse you), SHLD stock reports show $432 million in capital expenditures. For FY2013, it was $378 million. And for FY 2014, which just wrapped up, we are tracking less than $300 million, according to spending across the first three quarters of the year.
There’s no way around the harsh reality that SHLD is simply starving its stores. And customers are noticing.
Add to that retail shoppers still not rushing into stores after the recession, and you’ve got the makings of a tragedy playing out in front of our eyes.
Sears will report fourth-quarter results around Feb. 27 and stated that it will host a conference call at that time.
SHLD stock was up 19% in 2013.
