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Sears Holdings loss widens in Q2, misses Street

BY Katherine Boccaccio

Hoffman Estates, Ill. — Sears Holdings Corp. reported Thursday that its losses for the second quarter widened more than expected to $146 million, compared with a loss of $39 million in the year-ago period.

The operator of Sears and Kmart stores cited aggressive merchandise markdowns as one reason for the poor performance. This is the second consecutive quarterly loss of the company, and its fourth in the last five quarters.

"We are not satisfied with our results and are taking actions to turn around our performance in a challenging economic environment," Lou D’Ambrosio, CEO, said.

During the second quarter, the company cut 250 jobs and closed 29 stores to reduce expense. It also converted 14 Sears stores to Kmarts.

Revenue dipped 1.2% to $10.33 billion, topping Wall Street’s expected $10.13 billion. Same-store sales dropped 1.2% at Sears and were flat at Kmart.

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2Q loss widens for Sears Holdings

BY CSA STAFF

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 including10 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 inaddition to position reductions from the above actions it is reducing approximately 250 existing support positions.

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Earnings grow on Dollar Tree

BY CSA STAFF

CHESAPEAKE, Va. — The discount store channel continues to thrive, as evidenced by Dollar Tree’s strong second-quarter performance.

The company reported that sales for its second quarter ended July 30 increased 11.9% to $1.54 billion from $1.38 billion for the same period last year. Comparable-store sales increased 4.7%, on top of a 6.7% increase for the second quarter 2010.

Dollar Tree’s earnings rose an impressive 26.2% to 77 cents per diluted share from 61 cents per diluted share for the prior-year quarter.

“I am pleased with our second quarter performance as sales, earnings and operating margins continue to expand,” president and CEO Bob Sasser said. “Increases in customer traffic and average ticket drove our sales growth, which was strongest in the latter half of the quarter. Our operating margin continued to improve even with significantly higher energy prices throughout the quarter relative to last year. Earnings continue to grow and our stores are executing at a high level. We transitioned quickly from “summer fun” to back-to-school and are ready for the fall selling season.”

During the second quarter, Dollar Tree opened 76 stores, expanded or relocated 23 stores, and closed 11 stores.

Dollar Tree said it expects sales for the third quarter of 2011 to be in the range of $1.56 billion to $1.60 billion, based on low single-digit positive comparable-store sales. Diluted earnings per share are estimated to be in the range of 77 cents to 83 cents.

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