Sears Holdings Corp (SHLD) Falls 13 Percent On Weak Holiday Sales

The shares of Sears Holdings Corp (NASDAQ:SHLD) slumped by more than 13% to $36.99 per share in after-hours trading due to weak sales performance of its store brands, particularly Kmart and Sears Domestic during the holiday season.

Sears’ same-store sales results

Sears Holdings Corp (NASDAQ:SHLD) said its total same-store for the quarter-date-period dropped by 7.4%. The same-store sales of Kmart and Sears Domestic declined by 5.7% and 9.2%, respectively, in the quarter-to-date periods that ended January 6, 2013. During the same period, Sears Canada also suffered a 4.4% sales decline during the same period.

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According to the retailer, Kmart’s sales in most categories including consumer electronics, grocery & household and toys were tepid while Sears Domestic sold fewer consumer electronics, tools, and home appliances during the period.

In a blog post, Edward Lampert, CEO and largest shareholder of Sears Holdings Corp (NASDAQ:SHLD) stated, “The results that we posted are not nearly what we want them to be. They also overshadow all of the work that’s being done by our associates, our vendors and the other businesses we work with, along with everyone who is developing better ways for us to serve our members.”

Fourth quarter/full year outlook

Sears Holdings Corp (NASDAQ:SHLD) expected to deliver adjusted EBITDA in the range of -$65 million to $65 million in the fourth quarter. The company estimated that Sears Domestic’s adjusted EBITDA will be around -$80 million and $20 million and Sears Canada at about $15 million to $45 million. The company projected to incur net loss in the range of $250 million to $360 million or $2.35 to $3.30 losses per diluted share. Excluding special items, its net losses are expected to be around $213 million and $316 million, or between $2.01 and $2.98 losses per diluted share.

For the full year ending February 1, the retailer anticipated to deliver adjusted EBITDA in the range of -$284 million to -$414 million. Sears Domestic’s adjusted EBITDA around -$308 million and -$408 million and Sears Canada at about -$6 million to -$24 million. Sears Holdings Corp (NASDAQ:SHLD) estimated to record net losses in the range of $1.3 billion to $1.4 billion or $11.85 to $12.88 losses per diluted share.

Commenting on the sales performance of the company, Mary Ross Gilbert, analyst at Imperial Capital LLC said, “The numbers are atrocious. A lot of apparel retailers were challenged in the quarter. And those that executed well were able to come out OK.”