2Q loss widens for Sears Holdings

HOFFMAN ESTATES, Ill. — Sears Holdings turned in disappointing sales and earnings for its second quarter as the company strives to turn around its performance in a weaker consumer spending environment.

Sears Holdings reported a net loss of $146 million, or $1.37 per diluted share, for the second quarter compared with a net loss of $39 million, or 35 cents per diluted share for the same period last year.

Total revenues decreased $125 million to $10.3 billion for the quarter, as compared with total revenues of $10.5 billion for the same period last year.  

Total domestic same-store sales for the quarter declined 0.7%. Comparable-store sales at the company's Kmart division were flat, while comps at Sears domestic unit were down 1.2%. According to Sears Holdings, the decline in sales at its Sears domestic unit was primarily driven by consumer electronics. The Kmart quarterly comparable-store sales included increases in several categories, such as outdoor living, grocery and household, tools, appliances, and footwear, which were offset by decreases in the consumer electronics, pharmacy and drug categories.   

Lou D’Ambrosio, Sears Holdings’ CEO and president, said, “We are not satisfied with our results and are taking actions to turn around our performance in a challenging economic environment.  While we improved our revenue trend, including growing our online business by over 30%, we had lower gross margins.  The margin decline was due to markdowns taken to clear seasonal inventory and promotional activity.  Inventory was tightly managed, as we finished the quarter with domestic inventory $75 million lower than prior year compared to the first quarter when inventory was $416 million higher than prior year.”

During the quarter, the company closed 29 stores including 10 Kmart stores, three Full-line stores, 12 Hardware and Appliance stores, two Sears Auto Centers and two The Great Indoors stores. In addition, the company said it converted 14 Sears Grand stores to Kmart stores and closed seven product repair center locations.

Sears Holdings announced that in addition to position reductions from the above actions it is reducing approximately 250 existing support positions.

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