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Financial struggles continue at Sears Holdings

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HOFFMAN ESTATES, Ill. – Sears Holdings Corp. reported a narrower quarterly loss this month on fewer onetime expenses, but sales sank 20%, depressed by store closings and soft clothing and consumer electronics volume.

The company posted a net loss of $454 million for its third quarter ended October 31, down from $548 million a year earlier. Stripping out onetime items, the losses would have been $350 million and $288 million, respectively.

“We remain focused on restoring Sears Holdings to profitability by concentrating on our best stores, rewarding our best members and pursuing our best categories through innovative solutions to product and service offerings,” said Eddie Lampert, the company’s chairman and chief executive officer.

He added: “Through deliberate strategic actions, notably with respect to our promotional design and marketing spend, we have made meaningful progress in our transformation and reported a fifth consecutive quarter of improved year-over-year results. As expected, the results of these actions have led to comparable-store sales declines despite an increase in profitability. At the same time, we recognize a lot of work remains, and we have brought in a number of experienced leaders to drive our business forward with a plan to win as a member-centric integrated retailer. As we head into the fourth quarter, we have intensified our focus on our product offerings and promotions in order to enhance member engagement and provide our members with the best experience possible throughout the holiday shopping season.”

Same-store sales slid 7.5% at Kmart and 9.6% at Sears domestic stores.

Sears has failed to have three straight profitable quarters since January 2008. It was in the black in the second quarter of this year, helped by its spin-off of 235 properties into a real estate investment trust it created called Seritage Growth Properties — but that was preceded by 12 consecutive quarterly losses.

“During 2015, we have enhanced Sears Holdings’ financial flexibility and achieved our objective of reducing our reliance on inventory as a source of financing with the completion of the rights offering and sale-leaseback transaction with Seritage Growth Properties, which generated $2.7 billion in cash and the amendment and extension of the company’s $3.275 billion asset-based credit facility,” said chief financial officer Rob Schriesheim.


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