Sears‘ sales declined in the second quarter as it shifted away from low-margin goods like electronics and it focused on increasing the number of loyal customers through reward programs.
Chairman and CEO Edward Lampert, a billionaire hedge fund investor, combined Sears and Kmart in 2005, about two years after he helped bring the latter out of bankruptcy. Facing increased pressure from Wal-Mart, Target and others, Sears created the Shop Your Way loyalty program which rewards members for items they purchase.
Shop Your Way members made up 74 percent of second-quarter sales at Sears and Kmart locations, but the retailer’s performance still lagging.
Revenue fell to $6.21 billion from $8.01 billion. That was still better than the $5.88 billion booked in the first quarter. Yet sales at stores open at least a year, a key indicator of a retailer’s health, declined 10.8 percent.
For the period ended Aug. 1, Sears Holdings Corp. earned $208 million, or $1.84 per share. That compares with a loss of $573 million, or $5.39 per share, a year ago.
Excluding a large gain on asset sales and other items, the retailer lost $2.40 per share.
Sears, based in Hoffman Estates, Illinois, said Thursday that it has the financial flexibility to continue its turnaround and to fund operations. The company had $1.8 billion in cash at quarter’s end.
