Things haven’t gone well, fiscally speaking, for Sears Holdings Corp. in quite some time. After the May 22 first-quarter financial results conference call, Sears had recorded its 29th consecutive quarter with a sales decline. First-quarter net loss was $402 million, well above the $279 million net loss in the same period a year ago.
For Sears Chairman and CEO Eddie Lampert, the only silver lining that is carrying the company’s financial hopes is its customer loyalty program known as Shop Your Way. The program accounted for 74% of sales in the quarter.
“We continue to invest heavily in driving our Shop Your Way platform,” Lampert said during the May 22 conference call. “Member sales for the first quarter represented their highest level ever, reaching over 74% of eligible sales, up from 68% in the first quarter of 2013. Points redeemed increased by over 30%, demonstrating that our members are becoming even more engaged with the program and taking advantage of the points that they are earning and the points that they are being awarded.”
To energize company cash flow, Lampert said the company is considering strategic options for its auto-service centers and has hired Bank of America Corp. to help with the previously announced plan to sell its 51% stake in Sears Canada. Sears also expects to generate more than $1 billion this year in proceeds, including a $500 million dividend from the Lands’ End spinoff.
Lampert said Sears plans to close 80 stores this year.
Lampert said that another business that struggled in the first quarter was the Sears fitness equipment business.
“Sears is the leader in fitness equipment in the United States, and we intend to leverage and network this business also as part of Connected Living to develop capabilities that go beyond just selling treadmills, ellipticals, and other fitness equipment,” he said. “As one step, in the first quarter, we rolled out the integration of Shop Your Way, with several third-party fitness activity tracking clouds, permitting us to reward members for activities monitored via Fitbit, Jawbone Up, iFit-enabled cardio equipment, and a host of smartphone apps.”
Lampert believes Sears can partially offset the impact of store closures, and, if successful with its integrated retail initiatives, grow its overall ecosystem in line with changes in consumer behavior and technology.
“As changes occur in and around retail, we intend to be in the mix, focused on investments and acquisitions that accelerate and improve our transformation,” Lampert explained. “The framework we have laid out focuses on the levers we have in light of our scale to drive profitability. The 
framework heavily leverages our two key platforms, Shop Your Way and Integrated Retail. These platforms enable us to better engage with and serve our members. We are building on and expanding our Shop Your Way and Integrated Retail capabilities every day, and our members are becoming more and more engaged as our metrics for the first quarter indicate.”
Lampert added: “We are putting our members at the center of our model. Building relationships through personalization is the foundation, and we believe that our Shop Your Way and Integrated Retail capabilities will enable us to better serve our members. We show the difference in annual spend between an average engaged Shop Your Way member and a very engaged Shop Your Way member. The spend difference is significant, with our most actively engaged members spending 75% more than our average member. We’re also focused on shifting our promotional design to be less dependent on promotional markdowns and replacing them with Shop Your Way points, where it makes sense. There will always be a level of promotional markdowns as part of our go-to-market promotional design, but our intent is to replace a portion of our existing promotional markdowns with points.”