WASHINGTON (AP) -- Sears slumped 19 percent in Friday trading after the department store posted an adjusted third-quarter loss due to tumbling sales at Kmart and Sears stores.
THE SPARK: The company, based in Hoffman Estates, Ill., reported an adjusted loss, excluding one-time items, of $1.99 per share, down 20 percent from its results in the prior-year period.
Revenue dropped nearly 6 percent to $8.86 billion.
THE BIG PICTURE: Sears is trying to turn around its once-iconic chains with aggressive cut costs, trimmed inventories, asset sales and other spin-offs.
THE ANALYSIS: Credit Suisse analyst Gary Balter called Kmart's results "terrible" and said that the Sears division was not able to take advantage of competitive issues, particularly weakness at its rival, J.C. Penney Co.
Sears said Friday that some are overlooking strong performances by the company.
"Two of our most important businesses, appliances and apparel, have had revenue and profit growth," said spokesman Chris Brathwaite. "Sears apparel has had five straight quarters of same-store sales growth. Our online business grew by over 20 percent."
While acknowledging that apparel and appliance sales have bounced back, Credit Suisse zeroed on weak results for the company's Kmart stores
"Sears' biggest problem, one that seems to be getting worse, is Kmart. Years of underinvestment, combined with high prices, expansion by dollar stores and Wal-Mart into Kmart's urban markets and more aggressive pricing and programs by Wal-Mart are leading to what appears to be a permanent decline in this inefficient retailer," Balter wrote in a note to investors.
Brathwaite does not believe that is true, and said that the retailer is moving forward on innovations that are seen nowhere else.
"People get confused about investment and what we are doing, focusing instead on investment in paint and fixtures and lighting," Brathwaite said. "We're doing that, but we're also investing several hundred millions of dollars in our Shop Your Way Rewards program. Sears is one of the first retailers to allow people to buy online and pick your items up in the store. The most significant growth, 20 percent in the quarter, is multi-channel transactions like this."
Kmart also said it is investing heavily, expanding layaway programs both in-store and online. Spokeswoman Shannelle Armstrong-Fowler said that the company is making it stores more all-inclusive, expanding its retail banking and ATM offerings.
SHARE ACTION: Shares of Sears Holding Corp. fell $10.99 to $47.49 in midday trading. The stock has ranged between $26.90 and $79.99 in the past 52 weeks and has nearly doubled since the start of the year.