Sears narrows loss on cost cuts; sales decline

The Hoffman Estates, Ill.-based company said Thursday that aggressive cost-cutting and reduced inventory levels helped narrow its loss in the second quarter from a year ago, with results coming in line with Wall Street expectations.

"We did what we said we were going to do," CEO and President Lou D'Ambrosio said in a letter to employees, noting that the company still has plenty of work ahead.

Despite the company's efforts to improve the customer experience in recent months, a key sales figure declined in the quarter at both its Sears and Kmart stores.

In the U.S., the company said revenue from Sears stores open at least a year fell 2.9 percent. The figure declined 4.7 percent for Kmart locations. The metric is an indicator of health because it strips out the impact of newly opened and closed locations.

Sears blamed competitive pricing for weaker sales of electronics. Lawn and garden sales also fell, with drought across the country hindering purchases.

Fewer clearance items also dragged down revenue, with tighter inventory levels limiting the amount of seasonal merchandise markdowns. Pharmacy sales fell as popular drugs such as cholesterol fighter Lipitor have come out in cheaper generic versions in the past year.

Back in May, Sears said it was investing heavily in improving the customer experience, with changes such as improved displays and iPads for sales staff to research products and help customers check out wherever they are in the store.

In an emailed statement Thursday, Sears spokesman Chris Brathwaite noted that the company continues to work on improving the shopping experience. He cited examples such as tying more promotions to its store credit cards and offering free flu shots at Kmart when customers spend $100 or more.