HOFFMAN ESTATES, Ill. — Two weeks before Sears Holdings Corp. reported a 38% drop in its quarterly profits last month, chairman Edward Lampert pointed out the company was undergoing dramatic changes that would significantly alter the way the retailer operates in the coming years.
Two weeks before Sears Holdings Corp. reported a 38% drop in its quarterly profits last month, chairman Edward Lampert pointed out the company was undergoing dramatic changes that would significantly alter the way the retailer operates in the coming years.
"Five years from now, I believe this company, to some people, will be unrecognizable to what it was 30 years ago," Lampert said during the company’s annual meeting here in early May.
Sears operates thousands of stores across the United States and Canada under the Sears and Kmart banners. Lampert reassured investors at the annual meeting that those stores are not going to disappear.
However, he suggested, they could be a hybrid of what they are today.
Shopping behavior is changing, and the Internet will be a key component of whatever shape Sears takes, he said.
Lampert pointed out that over the past year, Sears has expanded its web site to include thousands of items that are not available in its stores.
"We don’t want to wake up some day and find we missed the big trick," he told the crowd at the annual meeting.
Another major change on the horizon for the company, the chairman noted, is a plan to sell its exclusive brands outside of its stores.
The retailer needs to reach customers who do not come into Sears stores, especially young people who shop differently from their parents, Lampert said.
Meanwhile, the company reported that higher costs and more markdowns weighed on margins in its first fiscal quarter and that a jump in the Canadian dollar and weakness in its business there also dragged down profits.
Days before the annual meeting Sears Canada reported that its first quarter profit fell 30%.
Net income at the parent company fell to $16 million or 14 cents a share in the quarter ended May 1, from $26 million or 21 cents a share during the same period a year earlier. Net sales decreased slightly to just under $10.1 billion while same-store sales increased 1.7% at Kmart and 1.2% at Sears’ stores in the United States.