Sears 2Q Profit Plummets 62%
Hoffman Estates, Ill. Sears Holdings Corp. said second-quarter profit fell 62% as the company continued to struggle to attract customers to its stores despite a high-stakes restructuring.
The company also said that it expects that its sales and gross profit margins will continue to be pressured amid a sluggish economy.
The company said Thursday that it earned $65 million in the three-month period ended Aug. 2, compared with $173 million in the year-ago period.
The second-quarter 2008 results included the positive impact of the reversal of a $62 million reserve because of the overturning of a Feb. 2, adverse jury verdict related to the redemption of certain Sears, Roebuck and Co. bonds in 2004.
Revenue declined to $11.76 billion from $12.26 billion in the year-ago period. Overall same-store sales dropped 6.2% in the United States. Same-store sales declined 6.7% at Sears, and 5.6% at Kmart. Especially hard hit were categories such as home appliances and tools that have been hurt by the housing slump.
“Our second-quarter results reflect the continued effects of a slowing economy, which contributed to the earnings declines we have experienced since the third quarter of 2007,” interim CEO and president W. Bruce Johnson said.
He added that while it was a difficult quarter, the company was successful in reducing domestic inventory levels by $500 million. Johnson believes that should lead to lower markdowns and help improve gross margin rates in the second half of the year. The company said it intends to further reduce domestic merchandise inventories to better align current levels with expected sales.
Dollar Tree reports 2Q EPS growth
CHESAPEAKE, Va. Dollar Tree reported net earnings per diluted share of 42 cents, for the fiscal second quarter ended Aug. 2, an increase of 27.3% over the 33 cents earnings per diluted share for the same period, one year ago. Sales for the quarter were $1.093 billion, a 12.5% increase compared to $971.2 million, for the same period, one year ago. Comparable-store sales increased 6.5% for the quarter.
“Our performance in the second quarter demonstrates the growing relevance of Dollar Tree to the consumer during tough economic times,” said president and ceo Bob Sasser. “Increased demand for basic, consumable product is driving more customers into our stores, resulting in higher operating margin and earnings in the second quarter.”
The company estimates sales for the third quarter of 2008 to be in the range of $1.075 to $1.105 billion, based on low-to-low-mid single digit positive comparable-store sales. Based upon this sales forecast, diluted earnings per share are estimated to be in the range of 40 cents to 43 cents.
Full year sales are now forecasted to be in the range of $4.61 to $4.68 billion, based on low-to-low-mid single digit positive comparable-store sales for the full year. Based upon this sales forecast, diluted earnings per share are expected to be $2.33 to $2.43.
Gander Mountain cuts 2Q loss
ST. PAUL, Minn. Gander Mountain reported sales of $252.9 million for the quarter ended Aug. 2, an increase of 16.8% over the prior year period. Comparable-store sales decreased 11.7% in the second quarter. The 2008 period includes $39.7 million in revenue due to the expansion of the company’s direct marketing business through Overton’s.
Net loss for the second quarter was $4.9 million, or 20 cents per share, compared to a net loss of $9.7 million, or 48 cents per share, in the second quarter of fiscal 2007.