Sears Holdings moves toward member-based business model

Retailer reports third quarter 2012 earnings

HOFFMAN ESTATES, Ill. — Sears Holdings, the parent company of Kmart and Sears, is looking to shift its business model to one that focuses on members of its Shop Your Way program and their shopping experience, the company said in its third-quarter 2012 earnings report.

"For the third quarter and year-to-date, we improved EBITDA, accelerated our strategic actions and generated significant cash by delivering on the actions we outlined at our annual meeting," Sears Holdings president and CEO Lou D'Ambrosio said. "Our EBITDA improvement in the quarter came from some of our most important categories like appliances, apparel and home services as we introduced new offers, honed pricing, effectively managed costs and implemented better inventory management. We did experience shortfalls, however, in categories like grocery and household and consumer electronics, and are taking actions to improve that performance."

D'Ambrosio said more than half of its revenues at its U.S. Sears stores and Kmart stores come from Shop Your Way members. "Our investments are focused on our members and their experience — at the store, online and mobile — which is why we are investing in integrated retail and our Shop Your Way membership program," D'Ambrosio said.

Sales for the quarter, which ended Oct. 27, were $8.9 billion, a decline of $548 million over third quarter 2011, which the company attributed to having fewer Kmart and Sears stores and lower domestic comps. Kmart had sales of about $3.1 billion, compared with sales of $3.34 billion in third quarter 2011. Sears had sales of $4.7 billion in third quarter 2012, compared with $5 billion in third quarter 2011.

Kmart's comps for the quarter declined 4.8%, while domestic Sears stores' comps decreased 1.6%. Sears Canada stores' comps declined by 5.7%.

The company's loss for the quarter was $498 million, compared with $410 million in third quarter 2011.

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