HOFFMAN ESTATES, Ill. (AP) – Sears executives tried Wednesday to ease concerns about the troubled retailer's long-term outlook amid ever-sinking sales, emphasizing the company's financial strength, increased liquidity and prospects to boost operational results.
Chairman Edward Lampert told shareholders at Sears Holdings Corp.'s annual meeting that the company is "not planning to just survive" but thrive as a result of actions it's taking to not only win back disillusioned shoppers but get more productivity out of its real estate holdings.
"We're not just sitting here thinking that things will magically get better," Lampert said at a media briefing after the meeting at company headquarters in Hoffman Estates. "We're taking a lot of actions."
The company has been on the defensive with Wall Street after losing $3.14 billion in 2011 and because of the years-long decline in sales at its Sears and Kmart stores. Revenue at U.S. stores open at least a year, a key indicator of retailers' performance, fell 2.2 percent last year.
Sears had announced a day before the meeting that it expects to show much better results from the first quarter, including an operating profit and an overall gain helped by the sale of some of its 4,000 U.S. and Canadian stores. That sent its stock up sharply.
It expects to raise $400 million to $500 million by spinning off its smaller Hometown and Outlet stores as well as some hardware stores – a deal announced in February. It also sold 11 of its stores to real estate company General Growth Properties for $270 million and plans to cut inventory by $580 million.
Lampert said that while the real estate sales might not seem consistent with efforts to "fix the business," it was important to restore profitability to get shareholders' confidence back.
"We've lost people's confidence," he said. "I think we're beginning to get it back again."
Sears made progress in its operations during the first quarter, he said, but needs to execute its retail strategy better even as it examines further options with its huge holdings that make it one of the world's largest owners of real estate.
"We can't deny that we're, one, a real estate company, and two, a customer company," Lampert said.
"We still have the paradigm of trying to improve our operations but realizing we have a (real estate) asset base that deserves a return."
Lampert downplayed published reports that the company is shopping its Lands' End clothing business, saying it's not unusual to be approached about potential sales. He said Lands' End is "a very special brand."
CEO Lou D'Ambrosio said Sears is working to restore its profitability in three ways: financial and operational discipline, retail excellence and innovation in the customer experience.
Under D'Ambrosio, formerly the CEO at Avaya Inc., Sears has invested several hundred million dollars in improving the customer experience. Changes include giving sales staff almost 15,000 iPads and iPod Touch devices so they can research products and help customers check out wherever they are in a store. It's also improving displays and adding more high-tech washing machines and other appliances.
He said Sears is adapting to changes in the way customers shop, which includes a rapidly increasing number of shoppers who use their smartphones while shopping in stores.
Credit Suisse retail analyst Gary Balter said he was encouraged by what he heard from Sears executives. But he still thinks Sears is at a disadvantage to its competitors over the long term, in part because of its store locations.
"They're trying," he said. "But the problem is: How do they get younger customers to go to Sears?"
The analyst said Sears' assets and its plan don't justify what he thinks is its overpriced stock.
Sears shares rose have doubled since the end of 2011, when it closed at $31.78.
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