Sears moves to 2Q loss on store closings, costs

[August 20, 2009]  HOFFMAN ESTATES (AP) -- Sears Holdings Corp. said Thursday that it lost money in its second quarter, dragged down by store closings, severance and pension plan costs and lower sales.

The retailer that owns Sears and Kmart stores lost $94 million, or 79 cents per share, for the period ended Aug. 1. That compares with a profit of $65 million, or 50 cents per share, a year ago.

Excluding items such as a 32 cents-per-share charge for store closings and severance, and a 22 cents-per-share charge for domestic pension plan expense, Hoffman Estates-based Sears had a loss of $20 million, or 17 cents per share.

The retailer closed 28 underperforming stores in the quarter and said it expects an additional charge of about $5 million in the second half of the year as stores closed in the quarter wind down their operations.

Revenue at the company led by financier Edward Lampert fell 10 percent to $10.55 billion from $11.76 billion on the stronger dollar and same-store sale declines.

Analysts polled by Thomson Reuters forecast profit of 35 cents per share on revenue of $10.73 billion. Analysts' estimates generally exclude items.

The retailer's Sears Domestic same-store sales dropped 12.5 percent, hurt by the ongoing housing downturn and soft apparel sales. Kmart same-store sales dipped 3.9 percent, also on its weak apparel performance.

The pullback in spending on clothes is not uncommon for retailers during the recession, as shoppers are tightening their purse strings and gravitating toward getting more value from their dollar at discount-oriented businesses such as TJX Cos.

Same-store sales, or sales at stores open at least a year, are a key indicator of retailer performance since they measure growth at existing stores rather than newly opened ones.

Sears, whose brands include Kenmore, Craftsman and DieHard, looked for ways to improve its financials by paring inventories and cutting costs. Merchandise inventories fell to about $9.4 billion from $9.8 billion, while domestic inventory levels declined to $8.6 billion from $8.9 billion.

Total costs and expenses dropped to $10.61 billion from $11.58 billion.

[Associated Press]

Copyright 2009 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.