Sears Holdings loss widens in 3rd quarter
ASSOCIATED PRESS Nov 18, 2010
NEW YORK - Sears Holdings Corp.'s third-quarter loss widened more than expected, dragged down by continued weak revenue at its long-suffering Sears chain.
Business at its Kmart stores held up better, but they still saw a key revenue measure edge downward. The discount chain is expected to face even more pressure in the holiday quarter amid stiffer competition from rivals like Target and Wal-Mart, both of which are sharpening their merchandising in groceries.
In premarket trading, shares fell 2 percent to $64.85, down from $66.20 at Wednesday's close.
Sears Holdings, led by billionaire Edward Lampert, posted a loss of $218 million, or $1.98 per share. That compares with a loss of $127 million or $1.09 per share in the same period last year. Analysts surveyed by Thomson Reuters expected $1.08 per share.
Revenue fell 5 percent to $9.68 billion, short of analyst expectations of $9.89 billion.
Revenue at stores open at least a year fell 4.8 percent in the quarter, driven mostly by an 8.2 percent decline at Sears. The figure fell 0.7 percent at Kmart stores. It's considered an important measure of a retailer's performance because it excludes the effects of stores that open or close during the year.
"While Kmart improved profitability, our third-quarter results were disappointing, in large part due to lower sales of apparel and appliances at Sears," said interim CEO W. Bruce Johnson.
The company said Sears' weakness in home appliances resulted from weak demand, lower prices and a delay in rolling out new Kenmore products during the quarter. Overall, demand for appliances has declined as the home tax credits have expired.
Sears attributed the clothing declines to unseasonably warm weather that had shoppers holding off on cold-weather purchases.
Kmart's quarterly decline in revenue in stores open at least one year was due to weaker pharmacy and food sales. The chain is facing stiffer competition from Target, which is expanding into fresh food in its general merchandise stores. Wal-Mart is also scrambling to add back thousands of grocery items it cut back last year as part of a campaign to de-clutter its stores.
Thursday's results were the fifth quarterly loss for the retailer in the past two years, and analysts have blamed management for cutting costs at the expense of investing in its stores.
Sears Holdings is hoping to draw shoppers in with a number of strategies this holiday season. Sears, Roebuck is throwing its doors open on Thanksgiving Day for the first time in its history. The chain will open from 7 a.m. to noon that day. Kmart stores are typically open on Thanksgiving Day. Both Sears and Kmart are also touting their layaway services, hoping to lure in shoppers who want to stretch their budgets.
Meanwhile, Kmart announced last week it is letting customers who buy items online pick up their purchases on the same day at more than 600 locations. So customers can now buy items through the Kmart2go mobile website or smart-phone applications and select in-store pickup. The apps also can be used in stores for product information.