Sears has announced that its loss widened during the second quarter as the number of overall stores operating declined and the company dealt with the remaining effects from its spinoff of the Outlet and Hometown brand.
A number of retailers that included Macy’s Inc and Walmart Stores Inc reported results for the quarter that were disappointing, during August. They have also issued outlooks that were bleaker as consumers are worried about the uncertain economy.
Adding to the problem was the increase of 2% in Social Security payroll tax that Americans had to absorb starting in January. What that means is take home pay for a household that earns $50,000 is cut by $1,000.
However, losses were still growing and company shares dropped by 4% in premarket trading on Thursday.
For the three months ending August 3, Sears lost $194 million or the equivalent of $1.83 a share. That was in comparison to a $132 million loss or $1.25 a share last year during the same reporting period.
Revenue for Sears declined by 6% to end the quarter at $8.87 billion, which was down from $9.47 billion from the same quarter a year earlier. Most of the decline was due to the closing of stores.
Last October Outlet Stores, Inc and Sears Hometown shares started trading publically. The company sells mostly hardware, home appliances, lawn and garden equipment and tools. On Thursday, Sears said revenue from the two had been $450 million during the quarter, which was lower than the $645 million sold during the same quarter one year ago.
Kmart stores’ revenue at stores opened for 13 months or longer dropped by 2.1%. In Canada, sales were down by 2.5% for stores opened at least one full year.
Investors use this metric as an important gauge on sales and the health of a retailer since it excludes the results of stores recently closed or opened.