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Kmart up, Sears down in December

Hoffman Estates, Ill. -- A 2.3% same-store sales gain at Kmart was not enough to offset a 6% decline at Sears resulting in an overall 1.7% decline for the combined companies domestic operations during the five week December reporting period ended Jan. 1.

The December results were released as parent company Sears Holdings updated its earning guidance for the quarter ending Jan. 29 and indicated profits per share would exceed analysts’ consensus estimate of $3.09 and fall in a range of $3.39 to $4.12 with net income between $370 million and $450 million. For the fourth quarter to date, Kmart’s same store sales are up 3.4% while Sears is down by 5.3%. Last year, fourth quarter profits were $3.74 a share or $430 million.

The quarter to date gain at Kmart is attributable to the layaway program and strength in categories such as toys, home, sporting goods, apparel and footwear, according to the company. However, those increases were partially offset by declines in the food and consumables and pharmacy categories.

The sales difficulties seen at Sears are the same as those affecting other retailers with significant exposure to the consumer electronics category and televisions in particular. Price deflation and moderating sales of existing flat panel sets coupled with a slow uptake of newer  technologies has hindered sales growth at Best Buy, HH Gregg and Target. Over half of the decline at Sears occurred in consumer electronics category, but appliances and tools also experiencing declines, according to the company. Conversely, Sears said footwear, jewelry and automotive categories produced comparable store sales growth during the quarter-to-date period.

The company also updated its financial position and said it expects to end the year with approximately $1.1 billion in net cash balances and no outstanding borrowings under its $2 billion domestic credit facility. Sears Holdings plans to report its fourth quarter and full year results before the market opens on Feb. 24.

Improved profits during the fourth quarter will be offset by losses earlier in the year results in the company reporting full year net income between $130 million and $210 million, or between $1.16 and $1.88 per share. Last year, net income totaled $235 million or $1.99 per share.