Sears Managed to Shrink Losses in Q4, but Revenue Still Remains a Concern

Sears Holdings Corp. beat the market expectations by posting a smaller fourth-quarter loss. They managed to achieve it amid belt-tightening and working on the inventory management. The analysts had forecasted a loss of $2.85 per share, while the company posted $1.28 per share. Again the consensus on revenue was $5.9 billion, but the company came up with $6.1 billion figure.

In the past one year, the shares of the company were in a free fall with some 60% of the value eroded, but better-than-expected results made it jump by 11% in a day.

Jason Hollar, the Chief Financial Officer of the company said in a statement, “While the challenging holiday selling season pressured margins and comparable store sales, we were able to successfully improve profitability through disciplined inventory and costs management. We will continue to take actions to drive profitability, generate liquidity and adjust our overall capital structure while continuing to meet all of our financial obligations.”

Some of the cost-cutting measures taken by the company were closing its stores and giving pink slips to some of its employees working in the brick and mortar operations. The company also laid off some of its staffers at its Chicagoland headquarters.

If the long-term debt obligations of the company are compared then they have doubled from the last year, though the chain tried its level best to raise cash by selling off some of its assets.

The company looks determined to woo customers and has taken many steps to improve their experience. It includes introducing a new Sears MasterCard, which will enable the customers to accumulate their loyalty reward points and redeem them in their next shopping spree. The company has also expanded its partnership with the cab service Uber enabling its customers to get the rider rewards. It is also working on its mobile capabilities to provide home service operations to its clients.

Neil Saunders, the GlobalData Retail managing director, however, thinks that all these steps taken by the company are not enough. He feels that these are like “taking an Advil to cure a heart attack.” He believes that apart from sales of the company going down, the “pace of decline has accelerated sharply.”

Sears seems to work in the direction of making itself profitable. Last month only, the company had announced that it would close some 150 stores and reorganise some of its businesses to achieve annual savings of $1 billion. Working on it, the company sold its Craftsman brand for more than $525 million on Thursday.


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