Sears Holdings, which operates Kmart and its namesake stores, has been cutting costs, reducing inventory and selling assets to return to profit. At the same time, it's shifting away from its focus on running a store network into a member-focused business.
The latest results show the heavy challenges that remain.
Chairman and CEO Edward Lampert said in a statement Thursday that Sears (SHLD) is seeing progress in its shift to a member-focused business, with first-quarter member sales comprising 74 percent of eligible sales -- the highest level ever.
The executive said the biggest drag on sales has occurred in the consumer electronics businesses at its Kmart and Sears stores.
The Hoffman Estates, Illinois-based company lost $402 million, or $3.79 a share, for the period ended May 3. That compares with a loss of $279 million, or $2.63 a share, a year ago.
Revenue fell 7 percent to $7.88 billion partly because there were fewer Kmart and Sears stores open. The results also accounted for weaker Sears Canada revenue and the spinoff of Lands' End in April. Sears said last week that it is considering selling its Canadian operations.
Sales at domestic Sears stores open at least a year edged up 0.2 percent in the quarter. Excluding the impact of consumer electronics, the figure rose 0.8 percent. At Kmart stores open at least a year, sales declined 2.2 percent. Stripping out the impact of the consumer electronics business and its grocery and household goods category, the metric slipped 0.4 percent at Kmart.
Sales at stores open at least a year is a key indicator of a retailer's health. It excludes results from stores recently opened or closed.
One bright spot was online sales, which increased 26 percent.
Lampert 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, including Walmart Stores (WMT) and Home Depot (HD).
Sears caters to low to middle income shoppers, and is wrestling with a slow economic recovery that hasn't benefited all Americans equally. Many of its customers are juggling stagnant wages with higher costs of living like health care and food.
Sears has closed about 80 stores year to date and said it may close more during the rest of the year.
The company's stock fell $2.66, or 7.3 percent, to $33.90 in early premarket trading more than three hours before the market open.