Sears Holdings Corp. sharply reduced its net loss for fiscal 2012, but sales at both the Sears and Kmart units remained anemic.

Sears Holdings Corp., Sears, Kmart, Sears Domestic, Sears Auto Centers, Sears Canada, Edward Lampert, Lou D’Ambrosio

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Despite decline in sales, Sears reduces red ink

March 11th, 2013

HOFFMAN ESTATES, Ill. – Sears Holdings Corp. sharply reduced its net loss for fiscal 2012, but sales at both the Sears and Kmart units remained anemic.

In fact, 2012 represented the sixth consecutive year of declining comparable-store sales in domestic outlets. Comp-store results at Sears Domestic dipped 1.4% (although the chain managed a 0.8% increase in the fourth quarter), while Kmart suffered a 3.7% drop in comp-store sales for both the year and the fourth quarter.

Management blamed the drop at Kmart on lower sales in a majority of categories, most notably consumer electronics, pharmacy, grocery, household and drug store. The full-year decrease at Sears was attributed to lower sales of consumer electronics, lawn and garden, and home appliances as well as Sears Auto Centers, partially offset by sales growth in apparel and home.

Consolidated sales for Sears Holdings fell 4.1% to $39.85 billion, driven mainly by a 4.7% decline at Kmart to $14.57 billion. Sears Domestic sales slid 3.1% to $20.98 billion, while Sears Canada results declined 7% to $4.31 billion.

The net loss for the year was reduced by 70.4% to $930 million, while the operating loss decreased 44.2% to $838 million. The company reduced its net debt by $400 million and generated $1.8 billion from asset sales.

"Sears Holdings made progress in 2012 improving the profitability of our business, but we know there’s more work to be done in 2013," said chairman and chief executive officer Edward Lampert in a statement. "We have invested significantly in our online e-commerce platforms, our membership rewards program and the technology needed to support these initiatives."

Lampert recently assumed the CEO’s position after Lou D’Ambrosio stepped down last month because of a family illness. D’Ambrosio had engineered a number of changes to improve the stores and customer service while rolling out a loyalty program that now generates more than half of sales.

There were some bright spots for Sears Domestic. The apparel department recorded its sixth consecutive quarter of higher sales. Moreover, excluding consumer electronics, which performed weakly at many retailers, fourth quarter comp-store sales would have increased 2.4%.

In addition, the retailer’s online business soared more than 25% in the fourth quarter and was up 17% for the year.