Sears narrows Q4 loss as it cuts costs and inventory; sales drop 14%
Hoffman Estates, Ill. – Sears Holdings Corp. narrowed its loss for the fourth quarter as it lowered expenses and reduced inventory.
Sears said Thursday that it lost $358 million for the period ended Feb. 1, compared with a loss of $489 million a year ago.
Sales plunged 14% to $10.6 billion, from $12.3 billion. Sears’ revenue performance was hurt partly by having one less week in the latest quarter and having fewer Sears and Kmart stores, the company said.
Same-store sales fell 6.4%. At Sears stores, the metric was down 7.8%. It fell 5.1% at Kmart.
For the fiscal year, Sears reported a net loss of $1.4 billion, compared to a $930 million net loss in the previous fiscal year.
Revenues also declined during the fourth quarter and fiscal year. Quarterly revenues dropped 14% to $10.6 billion from $12.3 billion, and annual revenues declined 9% to $36.2 billion from $39.9 billion. Same-store store sales declined 3.8%, with decreases of 3.6% at Kmart and 4.1% at Sears Domestic.
Sears cited costs of transforming into a “member-centric” retailer using an integrated online platform and the omni-channel Shop Your Way membership program, as contributing to its net losses. Declining revenues were attributed to lower same-store sales and having fewer stores in operation.
“During 2013, we made progress in our continuing transformation into a member-centric retailer leveraging Shop Your Way and integrated retail, which we believe will position us for enhanced growth and profitability to create long-term shareholder value,” said Edward S. Lampert, Sears Holdings’ chairman and CEO. “Our full year results are impacted during this transformation as we continue supporting traditional promotional programs and marketing expenditures while we invest in our Shop Your Way program and integrated retail strategy. We have been investing hundreds of millions of dollars annually in our transformation and will continue to invest in the future of the company.”
The company said it continues to explore “strategic alternatives” for its auto centers and Lands’ End business.
Best Buy swings to profit on cost cuts
Minneapolis – Best Buy’s “Renew Blue” cost reduction program appears to be succeeding, as the retailer reported profit instead of loss during the fourth quarter and fiscal year 2013. The improvements came even as revenues in both periods declined compared to the same periods a year earlier.
During the fourth quarter, Best Buy reported net earnings of $311 million, a substantial improvement from its $460 million net loss a year earlier and above Wall Street projections.
For the fiscal year, Best Buy reported net earnings of $523 million, compared to a net loss of $233 million the prior fiscal year.
The main driver of this return to profitability was Best Buy’s “Renew Blue” effort that saved $765 million during the fiscal year, ahead of its cost reduction target of $725 million. The program is designed produces cost savings through optimization of the field and store operating models in the U.S. and Canada, structural changes to certain compensation and benefits programs; and ongoing optimization of returns, replacements and damages. Best Buy is now targeting a total of $1 billion in savings from Renew Blue.
Cost savings came as topline performance sagged. Revenues fell 3% to $14.47 billion from $14.92 billion in the quarter and declined 3% to $42.9 billion from $43.4 billion during the fiscal year. Domestic same-store sales fell 1.2% during the quarter and 0.4% during the fiscal year.
Looking ahead, Best Buy plans to open more “store-within-a-store” partnerships with technology providers such as Samsung and Microsoft. Best Buy expects continuing slightly negative revenue and same-store sales results during the first half of fiscal 2015.
Hubert Joly, president and CEO of Best Buy, said the company managed to perform well in a difficult fourth quarter.
“As we said in our holiday sales release, the fourth quarter was an environment of declining retail traffic, intense promotion, fewer holiday shopping days and severe weather,” said Joly. “In the face of these unusual circumstances, our strategy to be price competitive and provide an improved customer experience resulted in market share gains in a weaker-than-expected consumer electronics market.”
eBay Enterprise extends partnership with Karmaloop
eBay Enterprise, a leading global provider of commerce technologies, retail order management, fulfillment and customer care services and marketing services for retailers and brands, has extended its partnership with Karmaloop to provide marketing solutions that increase conversion.
Karmaloop is a global leader and largest online reseller of more than 500 underground streetwear name brands and fashion products reaching customers in more than 80 countries. Since 2012, eBay Enterprise has managed fulfillment for the company’s Karmaloop.com, BrickHarbor.com, PLNDR.com and Boylston Trading Co. sites.
“With eBay Enterprise, we’re able to engage our customers throughout the entire purchase path,” said Chris Mastrangelo, COO, Karmaloop. “We’ve experienced great success with their fulfillment services and have engaged with the eBay Enterprise Marketing Solutions team for usability, analytics, user experience strategy and creative to support optimizing our site experience and drive greater conversion. We’re excited to expand our relationship with them.”
“An optimized user experience that addresses consumer behavior and shopping need is vital to turning today’s hyper-connected consumers from browsers to buyers. Our collaborative efforts with the Karmaloop team will deliver an enhanced consumer experience their customers will love, driving higher conversion and helping Karmaloop grow its business,” states Steve Denton, vice president for eBay Enterprise Marketing Solutions.