Sears Holdings Corp. swung to a loss in the first quarter as consumers, pressed to pay more for food and fuel, spent less on apparel and home goods.
The owner of Sears and Kmart reported a net loss of $56 million, or 43 cents a diluted share, for the 13 weeks ended May 3. That compares with net income of $223 million, or $1.45 a share, in the first quarter of 2007. Stripping out special items, the loss was 53 cents a share as compared with a profit of $1.15 a share in last year’s period.
Sears fell below the expectations of analysts, who on average had expected the Hoffman Estates, Ill.-based retailer to register a profit for the quarter.
Revenues slid 5.8 percent to $11.07 billion from $11.75 billion in the prior-year quarter and were down 8.6 percent on a comparable-store basis at the company’s U.S. stores. Sears domestic comps were off 9.8 percent while Kmart’s U.S. stores contracted 7.1 percent.
“Our first-quarter results reflect the difficult economic environment and intense competition for consumer business,” commented W. Bruce Johnson, acting president and chief executive officer of the company. “That said, since May 3, 2008, our sales declines have moderated somewhat.”
Home appliances, lawn and garden products and apparel were singled out as categories most adversely affected by a soft economy and escalating costs for consumer staples such as gas.
With markdowns higher, gross margin fell 90 basis points to 27.3 percent of sales.
For more, see Friday’s issue of WWD.