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Sears Sags
Sears Holdings (Nasdaq:SHLD) continues to struggle as it posted a substantial third quarter loss on lower revenue. The company that owns retailers Sears, Roebuck & Co. and Kmart pointed out lower apparel and appliance sales as factors for its poor results. The stock, already near its 52-week low, was beaten down further.
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Losses All the Way Around
The company's third-quarter revenue slipped to $9.7 billion from $10.2 billion in last year's quarter. The net loss was $218 million or a loss of $1.98 per share, compared to a loss of $127 million or a loss of $1.09 in last year's quarter. Same store sales fell by 4.8%, with a 0.7% falloff for its Kmart segment, while the Sears segment was down 8.2%. With the 39-weeks' results for Sears already showing a net loss running at $241 million, it puts even more pressure on Sears' upcoming holiday retailing season.
Retail Parade Marches On
With third quarter results in from a variety of retailers, it's clear that Sears is not part of that hit parade. We've already seen retailers from luxury to wholesale to dollar stores, with everything in between, reaping the retail resurgence. Luxury department store Saks (NYSE:SKS) showed a strong performance along with a tremendous holiday outlook. Off-price apparel retailer TJX Companies (NYSE:TJX), with its TJ Maxx and Marshall stores, posted a good third quarter, as did BJ's Wholesale Club (NYSE:BJ) which successfully mined the club-discount niche. Mid-line department store Macy's (NYSE:M) appropriately joined the retail parade, turning around losses from last year's third quarter, while deep-discount retailer Dollar Tree Stores (Nasdaq:DLTR) continues to strut its strong stuff in the retail parade, despite its humble niche. Where does this put Sears? At the tail end of the retail parade, so the retailer needs to sprint harder than it's shown it can, in order to join even the middle of the pack.
Unpacking Sears
Overall, Sears' total revenue has been in a falling pattern since fiscal 2007, when it registered $53 billion in sales, to its revenue last fiscal year, which was $44 million. Income has also fallen since fiscal 2007 from its $1.492 billion level and continues to bounce around at significantly lower levels. This fiscal year, Sears is clearly headed for a loss. Despite turnaround talk, the company simply hasn't executed. (To learn more, see Turnaround Stocks: U-Turn To High Returns.)
The Bottom Line
Kmart is doing better on a relative basis, compared to the Sears segment. The discount retailer, though it still lags other discounters, at least has shown progress. The Sears stores, however, appear to be trapped in a nowhere land between high-end and low-end retail. As a mid-level retailer, it looks unfocused, as its results show. Each quarter, including this one, although Kmart and Sears have some positive areas of performance, it's always "the weather", economic softness or some other reason for the poor results.Yet look at how the other retailers are surging, despite the same economic climate. The heat is on Sears this holiday season.
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Losses All the Way Around
The company's third-quarter revenue slipped to $9.7 billion from $10.2 billion in last year's quarter. The net loss was $218 million or a loss of $1.98 per share, compared to a loss of $127 million or a loss of $1.09 in last year's quarter. Same store sales fell by 4.8%, with a 0.7% falloff for its Kmart segment, while the Sears segment was down 8.2%. With the 39-weeks' results for Sears already showing a net loss running at $241 million, it puts even more pressure on Sears' upcoming holiday retailing season.
With third quarter results in from a variety of retailers, it's clear that Sears is not part of that hit parade. We've already seen retailers from luxury to wholesale to dollar stores, with everything in between, reaping the retail resurgence. Luxury department store Saks (NYSE:SKS) showed a strong performance along with a tremendous holiday outlook. Off-price apparel retailer TJX Companies (NYSE:TJX), with its TJ Maxx and Marshall stores, posted a good third quarter, as did BJ's Wholesale Club (NYSE:BJ) which successfully mined the club-discount niche. Mid-line department store Macy's (NYSE:M) appropriately joined the retail parade, turning around losses from last year's third quarter, while deep-discount retailer Dollar Tree Stores (Nasdaq:DLTR) continues to strut its strong stuff in the retail parade, despite its humble niche. Where does this put Sears? At the tail end of the retail parade, so the retailer needs to sprint harder than it's shown it can, in order to join even the middle of the pack.
Unpacking Sears
Overall, Sears' total revenue has been in a falling pattern since fiscal 2007, when it registered $53 billion in sales, to its revenue last fiscal year, which was $44 million. Income has also fallen since fiscal 2007 from its $1.492 billion level and continues to bounce around at significantly lower levels. This fiscal year, Sears is clearly headed for a loss. Despite turnaround talk, the company simply hasn't executed. (To learn more, see Turnaround Stocks: U-Turn To High Returns.)
The Bottom Line
Kmart is doing better on a relative basis, compared to the Sears segment. The discount retailer, though it still lags other discounters, at least has shown progress. The Sears stores, however, appear to be trapped in a nowhere land between high-end and low-end retail. As a mid-level retailer, it looks unfocused, as its results show. Each quarter, including this one, although Kmart and Sears have some positive areas of performance, it's always "the weather", economic softness or some other reason for the poor results.Yet look at how the other retailers are surging, despite the same economic climate. The heat is on Sears this holiday season.
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
by
Greg Sushinsky
Greg Sushinsky is a passionate independent investor, who has done his own research, analysis and investing for 20 years. One of his earliest investing memories was when he first saved and bought U.S. Savings Bonds with his own money as a small child. From there, he studied investing on his own and made small stock purchases as he grew as an investor.
Sushinsky still follows the markets, studies and reads widely in financial literature, and has written over 75 articles on investing. He is also a professional editor, whose work is published extensively in large-circulation magazines, digests and across the internet. In other pursuits, Sushinsky writes fiction and has a university degree in philosophy. To see more of Sushinsky's literary work, see http://writing.gregsushinsky.com/.
Sushinsky still follows the markets, studies and reads widely in financial literature, and has written over 75 articles on investing. He is also a professional editor, whose work is published extensively in large-circulation magazines, digests and across the internet. In other pursuits, Sushinsky writes fiction and has a university degree in philosophy. To see more of Sushinsky's literary work, see http://writing.gregsushinsky.com/.
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