NEW YORK — Sears Holdings Corp. posted a profit in the first quarter, reversing a year-ago loss, on sales that soared 58 percent due to the inclusion of sales from its Sears stores.
Earnings also were bolstered by the company’s efforts to reduce expenses at both Kmart and Sears Domestic.
On Thursday the company reported first-quarter net income of $180 million, or $1.14 a diluted share, which is against a loss of $9 million, or 7 cents, in the same period last year. The increased earnings beat the average analyst estimate of 64 cents a share for the quarter.
Revenues rose to $12 billion from $7.6 billion during the same quarter last year. The company attributed the increase to the inclusion of Sears stores for the entire quarterly period ended April 29. The prior year’s numbers did not include Sears results for the whole period because the retailer was acquired by Kmart Holding Corp. on March 24, 2005.
“While we’re pleased with the progress we’re making, we continue to look for ways to be more efficient and effective in our business,” said Aylwin Lewis, chief executive officer and president of the company, in a statement. “With a goal of dramatically improving the customer experience at all of Sears Holdings’ touch points, we are starting with the basic and working with our associates to drive the culture shift necessary to become a great retail company.”
Same-store sales in the first quarter declined 4.8 percent, with Sears Domestic comps declining 8.4 percent and Kmart’s dropping 0.2 percent. The decline at Sears was attributed to softness across all categories and formats except home appliances. The drop at Kmart was attributed to lower transaction volume in the home goods categories, according to the company.
Separately, Sears Holdings announced on Thursday that it reached a $215 million settlement in a class-action securities litigation filed over statements made by the company regarding its credit card business. According to the company, the settlement will not have an effect on earnings and is still subject to judicial approval. The initial action was filed in federal court in Illinois on behalf of purchasers of Sears, Roebuck & Co. securities during the period between Oct. 24, 2001, and Oct. 14, 2002. Sears, Roebuck sold its credit card business in November 2003.
This story first appeared in the May 19, 2006 issue of WWD. Subscribe Today.
“As we move forward, Sears Holdings believes it is important to put this matter behind us so that we can continue to focus on building a great retail company,” Lewis said in a statement.