NEW YORK — Simplifying its business and books was expected to push Sears, Roebuck & Co. to a deep net loss in the first quarter, but weak apparel sales came as a surprise.
After forfeiting over $1.3 billion in revenue from the sale of its credit card business and taking an accounting charge of $839 million, after tax, it came as no revelation that Sears swung to a loss of $859 million, or $3.90 a diluted share, for the three months ended April 3. Last year, by comparison, the company had profits of $192 million, or 60 cents.
Once the accounting change was excluded from results, the loss per share of 9 cents beat the Wall Street estimate by a penny and came in at the upper end of Sears’ own guidance of a 14- to 9-cent loss.
However, without the contribution from the credit card business, total revenues fell 12.2 percent to $7.79 billion from $8.89 billion, and although merchandise and services sales rose 3.1 percent to $7.7 billion, apparel sales failed to carry their weight in driving top-line results. While consolidated domestic comparable-store sales gained 1.6 percent, apparel and accessories comps fell in the low-single digits.
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Chief executive officer Alan Lacy, on a conference call with analysts and investors, said, “The disappointing results were primarily caused by two factors. First, we transitioned our stores to spring inventory later in the period than ideal. Second, in hindsight, we adopted too conservative an approach to our inventory buying for the spring with total apparel inventory down approximately 14 percent compared to last year.”
Despite those missteps, Lacy said he is confident Sears’ apparel business is “on the right track,” citing the strides the company has made in improving the quality of its apparel as well as the mix.
Among the private labels, Sears said Lands’ End sold according to plan, helped by particularly strong results in the women’s business. Covington, for its part, also hit its target, generating more than $100 million in quarterly sales, while Apostrophe more than surpassed Sears’ expectations with a 50 percent sales increase over last year.
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By the Numbers
Sears, Roebuck & Co. |
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Most-Recent Qtr.
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Prior-Year Qtr.
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% Change
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| Sales |
$7,703
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$7,474
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3.1
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| Net Income (Loss) |
($859)
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$192
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N/A
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| EPS (Loss) |
($3.90)
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$0.60
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N/A
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Source: Company reports. For period ended April 3, 2004. Figures are in millions, except for per share data. |
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