HOFFMAN ESTATES, Ill. (AP) ? Sears Holding Corp. cut expenses and reduced inventory in its second quarter, helping the struggling retailer narrow its loss from a year ago.
The Hoffman Estates, Ill.-based company's adjusted results met Wall Street's expectations, but revenue fell short because of weaker sales at both Sears and Kmart stores.
Sears has been working to spruce up its image and turn around its ailing business. Back in May, the company noted it was investing heavily in improving the customer experience, with changes such as improved displays and iPads for sales staff to research products and help customers check out wherever they are in the store.
To boost shareholder confidence and restore profitability, the company has also looked to spinoffs and real estate sales. Three days ago, Sears said that it is moving forward with plans to spin off its Hometown and Outlet stores along with some hardware stores into a separate company.
Sears is also spinning off a stake in its Canada division to focus on turning around its U.S. business.
In a note to investors Thursday, ISI analyst Greg Melich said that Sears still has a long way to go to fix its business but that the improved liquidity should buy it some time. At the same time, he noted that the decline in sales at Sears and Kmart stores was worse than he had expected.
In the U.S., revenue from Sears stores open at least a year fell 2.9 percent. The figure declined 4.7 percent for Kmart locations. The metric is an indicator of health because it strips out the impact of newly opened and closed locations.
Sears blamed competitive pricing for weaker sales of electronics. Lawn and garden sales also fell, with drought across the country hindering purchases.
Fewer clearance items also dragged down revenue, with tighter inventory levels limiting the amount of seasonal merchandise markdowns. Pharmacy sales fell as popular drugs such as cholesterol fighter Lipitor started coming out in cheaper generic versions.
Sears Canada reported a 7.1 percent drop in revenue at stores open at least a year, hurt by lower sales of women's and men's clothing, tools, home decor and lawn and garden items. Unfavorable foreign currency exchange rates also impacted results.
For the period ended July 28, Sears lost $132 million, or $1.25 per share. That compares with a loss of $146 million, or $1.37 per share, a year ago.
Excluding costs tied to store closings, a pension expense and other items, the company lost 86 cents per share.
Revenue dropped 7 percent to $9.47 billion, missing Wall Street's $9.68 billion estimate.
Sears managed to trim its selling and administrative expenses in the quarter by reducing payroll and advertising costs. Merchandise inventories fell to $8.7 billion from $9.3 billion. Domestic inventory was reduced thanks to store closings and improved productivity.
Sears, which has more than 3,900 stores in the U.S. and Canada, also reduced its total debt to $3.3 billion from $3.5 billion.
Shares of Sears were up 4 percent at $58.84 in pre-market trading.
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