Sears posts 2nd consecutive quarterly loss as customers spend money elsewhere
By APThursday, November 19, 2009
Sears posts 2nd consecutive quarterly loss
HOFFMAN ESTATES, Ill. — Sears Holdings Corp. said Thursday that it lost money for the second consecutive quarter as customers continued to turn away from the retailer and spend elsewhere.
The company led by hedge fund financier Edward Lampert has struggled for years, with shoppers dwindling at its Sears and Kmart stores. But the retailer recently launched a major campaign to win over holiday shoppers — with measures like its new Christmas Club cash savings card good at Sears and Kmart stores — and capitalize on last year’s successful holiday layaway program.
“As we approach this important selling season, we are focused on executing our holiday strategy and meeting our customers’ needs,” interim CEO and President W. Bruce Johnson said in a statement.
The owner of Sears and Kmart stores lost $127 million, or $1.09 per share, for the period ended Oct. 31. That compares with a loss of $146 million, or $1.16 per share, a year earlier.
Excluding store closing costs and other items, Sears said it lost 81 cents per share.
That beat the average forecast of $1.09 a share by analysts surveyed by Thomson Reuters. Those estimates generally exclude one-time items.
The loss was the second consecutive quarterly deficit as Sears lost $94 million, or 79 cents a share, in the second quarter.
Third-quarter revenue fell 4 percent to $10.19 billion from $10.66 billion. That also beat Wall Street’s estimate for $9.92 billion in revenue.
The company did see some improved business, with sales at Kmart stores open at least a year up 0.5 percent. The retailer said sales of toys, home goods and footwear helped boost its performance.
Sales at stores open at least a year is a key indicator of a retailer’s performance since it measures growth at existing stores rather than newly opened ones.
But sales at domestic stores open at least a year dropped 2.3 percent, with the Kmart increase offset by a 4.6 percent decline at domestic Sears stores open at least a year. The Sears dropoff was due to weaker sales in its home appliance, lawn and garden, tools and home electronics categories.
The company was able to combat the softer sales results through cost control efforts and tight inventory management.
Total costs and expenses declined to $10.3 billion from $10.86 billion during the quarter. The retailer also lowered merchandise inventories to $10.8 billion from $11.4 billion. Domestic inventory levels fell to $9.9 billion from $10.5 billion, while inventory levels at Sears Canada dropped by $28 million.
Sears Holdings has about 3,900 full-line and specialty retail stores in the U.S. and Canada. Lampert acquired Kmart out of bankruptcy in 2003 and added Sears, Roebuck and Co. in 2005 to create Sears Holdings, which is based in the Chicago suburb of Hoffman Estates.
