Overall revenue decreased 27.3% to $6.2 billion, with same-store sales down at both Sears (-14%) and Kmart (-7.3%).
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Those sales declines along with mounting global economic uncertainty, namely in China, may have offset any uptick in investor sentiment as the firm’s stock remains in the red, down more than 2.5 percent in afternoon trading (2:48 p.m. EDT).
Gross margins expanded 140 basis points (bps) from 21.7% to 23.1% this quarter, with Sears’ namesake stores marking off gains of 2.1 percentage points, and Kmart chain having risen by 0.8 percentage points.
Sears domestic same-store sales fell 14%.
The gain boosted net profit attributable to shareholders to $208 million, or $1.84 per share, in the quarter, after a loss of $573 million, or $5.39 per share, a year earlier.
The pitch for the combined Sears and Kmart ad business involves agency holding companies rather than specific ad shops.
The company had already cautioned of its sales decline earlier in August. Vetr lowered Sears Holdings Corp from a “buy” rating to a “hold” rating and set a $25.26 target price on the stock.in a report on Monday, August 10th. The plaintiff says the company’s attempt to sell off its prime real estate holdings to a trust would strip Sears Holdings Corp of one of its last remaining valuable assets, leaving it as a debt-laden, money-losing renter in its own stores with a $150 million per year rental load for the 254 stores that would have to be paid to Seritage Growth Properties, another company Lampert controls. He added this transformation has allowed Sears Holdings to improve its EBITDA for four consecutive quarters. Sears has also been undertaking investments in services and new technologies, to better strengthen its omni channel capabilities and equip itself for the digital age. As such, it proposed to spin off its properties into an REIT.
Analysts were estimating a loss of $2.50 per share on $5.72 billion in revenue.
The company reported a $424 million decline in selling and administrative expenses and realized a significant tax benefit from the deferred taxes related to indefinite-life assets associated with the properties sold in the Seritage deal.
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Lampert also expressed confidence that the company is positioned for long-term success after completing its initiative to transform into a member-centric integrated retailer. The stock has fallen 34 percent in the last 12 months.
