Sears Sales Plunge Again During Second Quarter

Aug 3 Struggling retailer Sears Holdings Corp said on Monday comparable store sales in the United States fell sharply in the second quarter, sending its shares down 8 percent to a more than three-year low. Of that, Sears Holdings will realize a profit of $1.4 billion, 0 million of which was booked in the second quarter.

Meanwhile, Sears said sales at stores open at least 12 months slid 10.6% through July 25. This trend has led to a nosedive in Sears stock.

The new credit line, combined with $2.7 billion in proceeds from selling 235 properties to a real estate investment trust spun off from the retailer, has “substantially enhanced our financial flexibility”, the company said.

The company expected its net income in the range of around $155 million to $205 million or approximately $1.46 to $192 per diluted share, including the gain and tax benefit, but excluding final accounting adjustments for the period. The retail chain published updated second-quarter guidance in the early morning hours, pointing to a rare GAAP profit, but free-falling same-store sales trends. It is a minimum of the 10th straight quarter that the metric has declined. Same-store sales at Sears domestic stores fell 13.9%, while Kmart logged a 6.9% decline.

The Hoffman Estates, Illinois-based company said Monday that soft consumer electronics sales hindered its performance. That followed a 0.8 percent decline in the second quarter, and a 1 percent drop in the first quarter. The liquidity crunch has somewhat dampened with the extension of a credit line facility, which is stretched to $3.275 billion.

“Sears and its stockholders would receive a severely inadequate cash payment that the defendant Lampert-controlled company may use to cover operating losses and debt obligations for another year or so, before stockholders are left holding the bag in an insolvency widely viewed as inevitable if the proposed transaction occurs”. The tax benefit amounts to $240 million and will be carried to subsequent quarters, over the terms of the leases, in addition to the balance of the remainder of $900 million, in total gain.