Sears Holdings Corp. and The Bon-Ton Stores Inc. on Thursday both posted first-quarter results, with Sears showing a profit as a result of asset disposals and Bon-Ton turning in a loss.
This story first appeared in the May 18, 2012 issue of WWD. Subscribe Today.
Sears also revealed that its board has approved a partial spin-off of its interest in Sears Canada Inc., of which Sears owns 95 percent of the outstanding common shares. Following the spin-off, Sears will retain a 51 percent stake in Sears Canada. The company, which said the spin-off would occur later this year, also said it could elect to further reduce its Sears Canada stake. The move is expected to enable each business to focus on its own operations.
Sears said net income attributable to shareholders for the three months ended April 28 was $189 million, or $1.78 a diluted share, against a net loss of $170 million, or $1.53, a year ago. The results include gains on the sale of certain stores in the U.S. and in Canada, as well as leasehold interests. The adjusted loss from continuing operations was 31 cents a diluted share versus $1.34 last year. On an adjusted basis, Wall Street analysts had expected a loss of 67 cents a share on sales of $9.15 billion.
Sales fell 2.8 percent to $9.27 billion from $9.54 billion, with comparable-store sales at Sears’ domestic stores down 1 percent, while Kmart comp-store sales were down 1.6 percent. Comps at Sears Canada fell 6.3 percent. The company said Sears achieved double-digit increases in its apparel and footwear categories for the quarter. Sears said Kmart saw sales increases in the apparel and footwear categories, but was not specific about what those gains were. Both businesses saw declines in sales of consumer electronics.
Lou D’Ambrosio, Sears Holdings’ president and chief executive officer, said, “We are pleased with the results for the first quarter and our progress toward restoring profit growth and transforming our company. Our actions were driven by a focus on three core priorities: enhancing financial and operational discipline, improving our core retail operations and leading customer-based innovation through integrated retail and an engaging membership program, Shop Your Way Rewards.”
Business at Bon-Ton, which had a difficult 2011, continued to slip in the first quarter of 2012.
Bon-Ton said the net loss in the quarter ended April 28 widened to $40.8 million, or $2.23 a diluted share, from $36 million, or $2.01, last year. Net sales fell 1.4 percent to $640.8 million from $649.9 million. Comparable-store sales declined by 1.3 percent.
“As we got into the quarter we realized we made some tactical errors, in terms of marketing events and how quickly we are trying to move to a more updated merchandise mix. There are things we need to correct and we will,” Brendan Hoffman, Bon-Ton’s president and ceo, told WWD.
Hoffman, the former Lord & Taylor ceo who joined the York, Pa.-based, 272-unit department store chain in February, said he’s been visiting many Bon-Ton stores and learning about their markets, including some in malls with heavy vacancies. “In certain cases, in a basically deserted mall, it kind of benefits us as a stand-alone store. In other cases, it may mean shrinking the store or looking to close or renegotiate the lease,” Hoffman said.
About the same number of closings and openings are seen this year. Renovations and merchandise changes will be accelerated to 67 stores this year, with many in the Minneapolis and Indianapolis markets. The program brings in updated merchandise and new brands, and grows space and inventory in the most productive categories, such as shoes.
“I am certainly seeing lots of low-hanging fruit,” Hoffman said. “Now it’s a matter of focusing the organization on the easiest, quickest opportunities. Each month, there is more and more I can effect.”