Sears Holdings Corporation, the retailer controlled by hedge-fund manager Edward Lampert, posted a fourth-quarter loss that was larger than it forecast last month as sales fell for the sixth consecutive year.
The loss narrowed to $489 million from $2.4 billion a year earlier, the Hoffman Estates, Illinois-based company said Thursday in a statement. Sears had predicted a loss of $280 million to $360 million. Revenue fell 1.8 percent to $12.3 billion, topping the two analysts’ estimates compiled by Bloomberg as domestic same-store sales improved.
Lampert took over as chief executive officer this month as the department-store chain works to snap a streak of quarterly sales declines stretching back to May 2007. His predecessor, Lou D’Ambrosio, worked to cut inventory and debt, increase online sales and use data from tens of millions of loyalty-program customers to spur revenue growth.
"The balance sheet looks good and things aren’t getting worse, but it is a year they raised extra money" after selling assets, said Paul Swinand, an analyst for Morningstar Inc. in Chicago. While operations are still "mediocre at best," the company did improve earnings even after spinning off its faster-growing smaller-format stores.
Sears shares advanced 15 percent this year, compared with a 7.7 percent gain for the Standard & Poor’s 500 Retailing Index.
In a letter to shareholders, employees and customers, Lampert highlighted improvements such as better clothing sales and the retailer’s growing loyalty program.
"We demonstrated that the operating performance of the company, while significantly below what it should be, was not on a continued downward trajectory," Lampert wrote.
Retailers including Wal-Mart Stores Inc. and Target Corp. are struggling to boost sales as a 2 percentage-point increase in the payroll tax and delayed tax returns leave shoppers with less to spend. Wal-Mart, the world’s largest retailer, said last week that same-store sales this quarter will be little changed because of a slowdown this month.
Sears sold stores and spun off its Hometown, Hardware and Outlet stores last year, as well as a portion of its Canadian unit. Total debt was $3.1 billion at year end, compared with $3.5 billion the previous year.
Sears said that more than half of its U.S. Sears and Kmart sales came from customers in its loyalty program. Online sales in the quarter rose 25 percent from the previous year and 17 percent for the full year.
"Sears Holdings is becoming a membership company," Lampert said.
Revenue at U.S. Sears stores open at least a year rose 0.8 percent, helped by clothing, home items and appliance sales, while Kmart’s declined 3.7 percent, for a companywide decrease of 1.6 percent. Lower consumer-electronics sales dragged down results.
The fourth-quarter loss narrowed to $4.61 a share from $22.63 a year earlier. On an adjusted basis, earnings per share from continuing operations were $1.12, compared with 54 cents a year ago. The company took charges of $455 million in pension settlements in the quarter, as well as $41 million in pension expenses.
Sears said it will cut $500 million this year from its 2012 $8.6 billion peak inventory level. It reduced inventory by a similar amount last year.