The turnaround efforts of new Sears Holdings (NASDAQ: SHLD) CEO Lou D’Ambrosio have died almost before they started. Sears reported especially poor earnings for the quarter that ended October 31. The figures show that the weight of past mistakes is too great to overcome.
Sears reported it had a net loss attributable to shareholders for the quarter of $421 million, or $3.95 loss per diluted share, in 2011, and $218 million, or $1.98 loss per diluted share, in 2010. Domestic comparable store sales decreases included declines of 0.9% at Kmart and 0.7% at Sears Domestic. Total revenues decreased $113 million to $9.6 billion for the quarter.
Wall St.’s view of the retailer’s fate is reflected in its share price. The earnings news pressed the stock down 5% to $65.10. As investors have watched holiday prospects for major retailers over the last month, Sears has fallen 8%. Target (NYSE: TGT) shares are flat over the same time frame. Walmart (NYSE: WMT) is up 4%.
Sears not only has a same store sales problem. Its modest online audience is the single largest hurdle it has to overcome. The company has nothing to offer clients who use Amazon.com (NASDAQ: AMZN), Target.com, or Walmart.com. Amazon.com had 106.9 million unique visitors in October according to Comscore. Walmart sites had 45.2 million. Target had 27.1 million, which puts it among the top 50 most visited US sites for last month. Sears is not on the list at all. Online shoppers have in many cases already set the destinations they use to shop, and the top three companies have taken the lion’s shares
D’Ambrosio joined Sears in February as CEO and president. The first sign that he might make progress is the critical 2011 retail season. If Sears and KMart do poorly in the current quarter, prospects until next November and December are grim.
Douglas A. McIntyre
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