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Sears' first-quarter loss widens as electronics sales remain soft

Sears Holdings reported a 7 percent first-quarter loss for the company, which operates Kmart and Sears stores.
By ANNE D’INNOCENZIO, Associated Press Published: May 23, 2014
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Sears Holdings signaled that it may close more stores than the 80 locations it is shuttering this year as the beleaguered retailer looks for ways to restore profitability and raise cash.

The news came as the Hoffman Estates, Illinois-based company, which operates Kmart as well as Sears stores, reported a wider first-quarter loss as sales declined 7 percent. The biggest drag was consumer electronics, a category that has been suffering because of price competition online.

Sears Holdings Corp., controlled by billionaire hedge fund investor Edward Lampert, has been cutting costs, reducing inventory and selling assets to return to profitability. Sears announced last week that it was considering selling its Canadian operations. It recently spun off clothing business Lands’ End as a separate public company after not having much success with it.

At the same time, it’s shifting away from its focus on running a store network to operating a member-focused business.

But its biggest albatross remains its stores, which have been criticized for being outdated. By the end of the first quarter, the company operated 1,900 Sears and Kmart stores.

Lampert, who is chairman and CEO, combined Sears and Kmart in 2005, about two years after he helped bring Kmart out of bankruptcy. But it has faced mounting pressure from nimbler rivals like Walmart and Home Depot.

Moreover, Sears is also facing broader issues that are tripping up many other retailers. Like other stores catering to low- to middle-income customers, Sears is wrestling with a slowly recovering economy that’s not benefiting all Americans equally. It also faces a shifting landscape where mobile shoppers want more flexibility on where and how they buy.

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