Sears moves to 2Q loss, sales continue to falter

United States department store Sears has posted another loss for its latest quarter, setting it on the way to its seventh consecutive year in the red. “And if it doesn’t have the inventory during the most important quarter of the year, look for the market to reason the company could be headed for a financial tailspin sometime in 2017”.

Sears posted a net loss due to lower sales of home appliances and apparel, and the company said it accepted debt financing of $300 million from Chief Executive Edward Lampert’s hedge fund, ESL Investments.

Shares in the owner of Sears and Kmart stores fell more than 6 percent in morning trading Thursday. The company has said it believes the Kenmore, Craftsman and DieHard brands can grow significantly with an expanded presence outside Sears and Kmart.

Mr. Lampert is also the biggest shareholder in the company and has been putting assets on sale and shutting down stores to curb the rising cash burn.

The store closures reflect Sears’ plan to focus on driving customer loyalty through a membership program called Shop Your Way. Loyal shoppers receive incentives to buy, but those moves haven’t gained much traction with consumers. The offer is expected to close in seven to 10 business days.

Sears has received interest from “a variety of potential partners” for Kenmore, Craftsman and DieHard brands as well as the Sears Home Services business, the company said.

Sears operates more than 60 stores in IN carrying the Sears name, including 14 department stores, more than 25 Sears Hometown Stores, five Sears Hardware stores and more than a dozen Sears Auto Centers.

For its latest quarter Sears reported a loss of $395m, or $3.70 a share, compared with the year earlier’s profit of $208m.

At a $2.03 loss per share, adjusted earnings beat analyst estimates for a loss of $3.48, and the total same-store sales decline of 5.2% improved on the first-quarter drop of 5.9%.

Net sales declined 8.8% to $5.66 billion. This figure is a key indicator of a retailer’s health because it excludes volatility from locations recently opened or closed.

Sears stock is now trading in the red.

Elements of this story were generated by Automated Insights (http://automatedinsights.com/ap) using data from Zacks Investment Research.