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TMCNet:  Sears shares drop 18% after 3Q loss

[November 16, 2012]

Sears shares drop 18% after 3Q loss

Nov 16, 2012 (Chicago Tribune - McClatchy-Tribune Information Services via COMTEX) -- Sears shares plummeted on Friday, trading down more than 18 percent after the company announced wider losses and disappointing sales in the third quarter on Thursday.


The stock finished the day at $47.48, down nearly 19 percent Friday.

The sputtering Hoffman Estates-based retailer reported an adjusted third-quarter per-share loss of $1.99 on sales of $8.86 billion.

For the same period a year earlier, Sears reported an adjusted loss of $3.95 per share on sales of $9.57 billion. Wall Street predicted a a per-share loss of $2.16 on sales of $8.58 billion for the quarter ended Oct. 27.

The company's third-quarter net loss from continuing operations widened to $498 million, from $421 million.

Declining sales have been a problem for the troubled Sears. The company reported that stores open at least a year -- a key measure of retail health -- continued to decline, as they have for 23 straight quarters, falling 1.6 percent at Sears U.S. stores and 4.8 percent at Kmart.

On a conference call on Thursday, company officials blamed sagging sales on a number of factors, including increased competition in the consumer electronics and grocery sectors as well as fewer stores. This time last year Sears had nearly 4,000 stores; today it operates slightly more than 2,600 Kmart and Sears stores in the United States and Canada.

Company officials emphasized their business is continuing to change to primarily member-based model. It's "Shop Your Way" loyalty reward program, according to Sears President and CEO Lou D'Ambrosio, has members in the "tens of millions." "Stores are now a part of a bigger shopping system," said D'Ambrosio. "At the center of that system is the member; that is increasingly the center of the business model." D'Ambrosio added that Sears' online business grew by 20 percent in the prior quarter.

The company has been busy trying to shore-up its finances namely by closing poorly performing stores, slimming inventory, sprucing up its remaining stores and spinning off assets including the $440 million it raised earlier this year by selling 14 stores and, a few months later, raising $446.5 million by spinning off its Sears Hometown and Outlet stores.

Earlier this week, Sears finalized the spinoff of a 44 percent stake in its Canadian division to shareholders. It now holds 51 percent of Sears Canada.

Sears will continue to "refresh" the stores in its fleet, spending roughly $250,000 per store, according to Ron Boire, executive vice president and chief marketing officer. Boire also holds the title of president for Sears and Kmart formats.

Sears biggest problem, is Kmart, according to Credit Suisse analyst Gary Balter, citing years of underinvestment, high prices and competition from the likes of Dollar Stores. "There is no reason to believe that the hemorrahaging& #8230;will stop," he wrote in a note today.

Morningstar analyst Paul Swinand blamed Sears' sinking shares on "short sellers are betting on a bad fourth quarter," he said.

Sears officials said they don't provide guidance for upcoming quarters.

crshropshire@tribune.com -- Twitter:@corilyns SHLD Chart SHLD data by YCharts SHLD Chart SHLD data by YCharts ___ (c)2012 the Chicago Tribune Visit the Chicago Tribune at www.chicagotribune.com Distributed by MCT Information Services

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