Sears Holdings meets low expectations in Q1
HOFFMAN ESTATES, Ill. — Sears Holdings reported a first-quarter net loss of $170 million, or $1.58 per diluted share, in line with the company's expectations for a net loss in the range of $145 million and $195 million, or between $1.35 and $1.81 per diluted share. The company reported net income of $16 million, or 14 cents per diluted share, in 2010.
The company reported that total revenues decreased $341 million to $9.7 billion for the quarter, as compared with total revenues of $10.0 billion for the same period last year. The decline in total revenue for the quarter was primarily a result of a 3.6% decrease in domestic comparable-store sales and the effect of having fewer Kmart and Sears full-line stores in operation, in addition to a 9.2% decline in comparable-store sales at Sears Canada, partially offset by an increase of $54 million due to changes in the Canadian foreign exchange rate.
The domestic comparable-store sales results included a decrease at Sears domestic of 5.2% and Kmart of 1.6%. Decreases in sales for the quarter at Sears domestic were primarily driven by the appliance, apparel and consumer electronics categories, partially offset by increases in the home, sporting goods, jewelry and footwear categories. Appliances experienced a low double-digit decline and benefited in the prior year from the cash for appliances rebate programs.
Apparel experienced slow spring/summer sales due in part to worse weather than the prior year. The Kmart quarterly decrease in comparable-store sales was primarily driven by decreases in the food and consumables and pharmacy categories.
"Our first quarter was adversely impacted by unfavorable weather, economic pressures facing our customers, and comparisons to last year's government-sponsored stimulus program relating to the purchase of appliances. However, we also fell short on executing with excellence. We cannot control the weather or economy or government spending. But we can control how we execute and leverage the potent set of assets we have," said Lou D'Ambrosio, Sears Holdings' CEO and president.