Hoffman Estates, Ill., Sears Holdings Corp. reported a 99% drop in third-quarter profit Thursday on weak sales at its Sears and Kmart department stores and continuing investment losses under hedge-fund manager chairman Eddie Lampert.
It was the worst quarter since Lampert formed the company by combining Sears and Kmart in March 2005, heightening questions among investors about Lampert’s strategy for reviving two faded chains, according to a report by Reuters.
The company, which earlier this week said it may buy out the rest of retailer Restoration Hardware Inc., reported net income declined to $2 million from $196 million a year ago when results were padded by $64 million in investment gains.
Sales for the quarter ended Nov. 3 slipped 3% to $11.5 billion from $11.9 billion in the fiscal 2006 period. Meanwhile, same-store sales decreased 4.2% for the quarter at Sears stores and 5% at Kmart, with notable declines in clothing, and lawn and garden at both
“We are very disappointed in our performance for the third quarter. We cannot blame our results entirely on the retail and macro-economic environments. We have much on which to improve and are working hard to do so,” said Aylwin Lewis, Sears Holdings’ CEO and president.
Sears also warned it expects difficult economic conditions to persist in the near-term, with sales and gross margin likely continuing to be pressured through the rest of the year.