Sears Holding Shares Tank After Earnings Report
Shares of Sears Holdings (SHLD) were down 4% to $23.34/share after reporting second quarter earnings. The company reported its second quarter results before the market opened on August 20th, 2015. Sears Holdings reported a mix of bag of news to shareholders. For the first time in three years Sears has reported a profits of $208 million dollars or $1.84/share.
The Company operates in two segments, Kmart and Sears Domestic. The Kmart segment operates approximately a total of 979 Kmart stores across 49 states, as well as Guam, Puerto Rico and the U.S. Virgin Islands.
For the last few years Sears has been on a restructuring strategy under the leadership of Chairman and CEO Edward Lampert. He continues to restructure the company and to leverage its vast real estate portfolio.
Sears Holdings reported a profit of $208 million or $1.84 dollar/share, thanks to gains from real estate deal. When you exclude real estate gains for the second quarter, Sears would have reported a net loss of $256 million dollars. In the same period last year Sears reported a net loss of $573 million.
The company's revenues in the second quarter declined 22% to $6.6 billion from $8 billion in the second quarter of 2014. Sears' management explained that their revenue decline primarily came from their actions in streamlining operations and focusing on making Sears stores member-centric stores. The company said that their comparable store sales dropped 10%. Kmart and Sears Domestic saw a 7.3% and 14% decline in store sales during the second quarter. The company saw gross margins fall to $307 million dollars and saw administration expenses decline to $424 million dollars in the second quarter.
Edward S. Lampert, Holdings' Chairman and Chief Executive Officer, said in the company's press release, "The second quarter marked our fourth consecutive quarter of improved results. During the quarter we completed many of the objectives we laid out to transform Holdings from a traditional, store-network based retail business model to a more asset-light, member-centric integrated retailer leveraging our Shop Your Way platform. The successful completion of these actions has positioned Sears Holdings for long-term success and is consistent with our strategy to focus on our best stores, reward our best members and pursue our best categories as part of our transformation. As our results over the last four consecutive quarters demonstrate, we are successfully enhancing our margin rates and improving EBITDA performance as we become more efficient with our promotional programs and the use of Shop Your Way to replace more traditional forms of marketing with more targeted and personalized digital interactions with our members."
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