The losses continue to mount for Sears Holdings in the second quarter. The retailer also received additional financing through a loan from the investment firm controlled by its chairman.
In the second quarter ended July 30, Sears Holdings recorded a company net loss of $395 million, or $3.70 per diluted share, versus net income of $208 million, or $1.84 per diluted share, in the year-previous period.
Adjusted company net loss was $217 million, or $2.03 per diluted share, compared to an adjusted net loss of $256 million, or $2.40 loss per diluted share, in the prior-year quarter. A MarketBest published analyst average estimate called for an adjusted loss per diluted share of $3.48.
Kmart comparable store sales slipped 3.3%, while Sears domestic slid 7% year over year.
Kmart experienced comp increases in toys, jewelry, mattresses and apparel, Sears Holdings maintained, but they were more than offset by declines in the pharmacy, grocery and household, and consumer electronics categories. Sears domestic experienced significant comp decreases in home appliances, apparel, consumer electronics, footwear, lawn and garden, and tools, the company noted.
Revenues were $5.66 billion versus $6.21 billion in the 2015 quarter. Operating loss was $269 million versus operating income of $99 million in the year-earlier period.
Sears Holdings generated $176 million from the sale of real estate properties and other asset sales in the quarter, the company stated, and accepted $300 million in funding from ESL Investments, an organization controlled by the retailer’s chairman and CEO, Edward Lampert, secured by a junior lien against inventory, receivables and other working capital.
Lampert stated, “We continue to face a challenging competitive environment and while we continue to focus on our overall profitability, including managing expenses, we reported a net loss for the second quarter. We are encouraged by the year-over-year improvement in our adjusted EBITDA and feel we are making progress in our transformation as we remain focused on our best stores, our best members and our best categories to drive our business and enhance the member experience.”
Rob Schriesheim, Sears Holdings CFO, added, “During the first half of 2016, we have demonstrated our ability to finance our transformation strategy with the levers available to us through our portfolio of assets and businesses. The sale of assets, combined with the previous closing of the $750 million term loan, together with the $500 million secured loan facility, provided us with over $1.4 billion of financing during the first half of 2016. We have continued to demonstrate our flexibility in the third quarter of 2016 with the announcement of the recently received offer to provide $300 million of additional debt financing. As we move into the second half of 2016, we continue to explore alternatives for our Kenmore, Craftsman and DieHard, and Sears home services businesses by evaluating potential partnerships or other transactions. As we navigate through the current challenging retail environment and executing our transformation, we will continue to take actions to adjust our capital structure and manage our business to enable us to execute on our transformation while meeting all of our financial obligations.”
