NEW YORK — Sears narrowed its fiscal fourth-quarter loss as it reduced expenses and improved sales a little at its namesake stores. The results offer a glimmer of hope for a department-store chain that still has a long way to go to turnaround its Sears and Kmart stores.
The report comes after an announcement last month by Sears Holdings Corp. that its chairman and hedge fund billionaire, Edward Lampert, would take over as chief executive officer. Investors are concerned whether Lampert will continue to invest in improving the shopping experience at stores.
But in his annual letter to investors, Lampert sought to ease worries on Wall Street by promising that the company will continue to invest in technology, bolster its online operations and make other changes to shore up its business.
“To win the game, we have to change the game. We not only need to adapt, we need to lead and stay ahead of the curve,” said Lampert, who succeeds Louis D’Ambrosio, who left this month because of family health matters.
Sears’ shoppers have been hit hard by economic challenges such as high unemployment and stagnating wages. Critics also say the company has failed to make a significant investment in its stores so they can compete with Wal-Mart and Target.
In his note to investors, Lampert addressed critics by noting the company has invested “selectively in our better performing stores without throwing good money ... in our poor performing stores.
“If it were just about store investment, then Best Buy would be thriving after the demise of Circuit City ... and other retailers who made significant store investments would be thriving instead of struggling to chart a new course,” he went on to say.
Sears has been making changes in its stores. Among them, the company has given sales staff almost 15,000 iPads and iPod Touch devices so they can research products and help customers check out wherever they are in a store. It’s also improving displays and adding more high-tech washing machines and other appliances. Additionally, the company is focusing on a loyalty program, which now accounts for more than half of its revenue.
But Sears, which has 2,500 stores in the U.S. and Canada, also has focused on cutting expenses. Last year, Sears announced plans to restore profitability by cutting costs, reducing inventory, selling off some assets and spinning off others. The company reduced net debt by $400 million and generated $1.8 billion in cash from asset sales during the fiscal year.
During the fourth quarter that ended Feb. 2, Sears lost $489 million, or $4.61 per share. That compares with a loss of $2.4 billion, or $22.63 a share, a year earlier. Excluding certain items, earnings from continuing operations were $1.12 a share, below the company’s forecast last month of $1.25 to $2 a share.
Revenue fell 2 percent to $12.26 billion from $12.48 billion, in part because of the impact of having fewer Kmart and Sears stores operating and softness in the consumer electronics department. Overall revenue at U.S. stores open at least a year dropped 1.6 percent. But the figure at Sears stores in the U.S. and Canada rose 0.8 percent, helped by strength in the clothing, home appliance and home categories, while it dropped 3.7 percent at Kmart.
Meanwhile, total costs and expenses declined to $12.88 billion from $13.18 billion.
For the full year, Sears narrowed its loss to $930 million, or $8.78 a share, from the prior year’s loss of $3.14 billion, or $29.40 a share. The company’s adjusted loss from continuing operations was $2.03 a share. Revenue fell 4 percent to $39.85 billion.
“With full year results rather uninspiring, 2013 looks like another make-or-break year for this struggling retailer,” wrote Greg Melich, an analyst at International Strategy & Investment Group LLC.
Sears shares fell more than 5 percent, or $2.40 per share to $45.07 on Thursday.
Business, Pages 29 on 03/01/2013