Sears Holdings Corp. net loss narrows

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Sears Holdings Corp. narrowed its third quarter loss, partly attributed to a reduction in selling and administrative expenses and a reduction in debt. The stock slipped.

The home appliance and specialty retailer’s loss shrank to $127 million, or $1.09 per diluted share, equaling the consensus estimate of analysts polled by Yahoo Finance, in the quarter ended Oct. 31. That compared with a loss of $146 million, or $1.16 per diluted share, in the same quarter of the prior year.

Revenue fell to $10.2 billion from $10.7 billion in the year-earlier quarter, a decrease of 4.4 percent. This beat the estimate of $9.92 billion by analysts polled by Yahoo Finance.

The reduction in selling and administrative expenses reached $101 million.

The third quarter per-share results were impacted by the repurchase of shares at a cost of $224 million and $358 million respectively in the 13-week and-39-week periods ended Oct. 31, charges of $10 million associated with store closings and severance, domestic pension plan expenses of $44 million, and mark-to-market gains on Sears Canada hedge transactions of $2 million.

Sears Holdings closed seven underperforming stores in the third quarter, versus 14 in the third quarter last year.

“For the holiday season expect a promotion environment likely to keep sales and margins in check. We think Sears is going to have to be aggressive in price to effectively compete with Walmart and Target,” said Kim Picciola, an analyst with Morningstar Inc.

She added, “as the economy recovers and as they close some underperforming stores, we expect sales trends to reverse. We expect sales to turn positive at some point and margins to start to expand.”

Analysts polled by Yahoo Finance estimate earnings of 85 cents per diluted share and sales of $43.13 billion in Sears’ current fiscal year ending in January, compared with earnings of 42 cents per diluted share and $46.8 billion in sales last fiscal year.

The company’s net loss in the 39 weeks ended Oct. 31 was $195 million, or $1.64 per diluted share, compared with a loss of $137 million, or $1.07, per diluted share, in the year-earlier period. Revenue fell 8 percent to $30.8 billion from $33.5 billion.

Sears Holdings stock closed Thursday at $72.95, down $2.82 or 3.7 percent.

Sears Holdings Corp. Segmented Third-Quarter Revenue in billions of dollars

NUMBER OF STORES 2009 2008
Kmart: 1,343 $3.5 $3.5
Sears Domestic: 2,180 $5.5 $5.8
Sears Canada: 391 $1.2 $1.3
Total: 3,914 $10.2 $10.7

Sears Holdings Corp. narrowed its third quarter loss, partly attributed to a reduction in selling and administrative expenses and a reduction in debt. The stock slipped.

The home appliance and specialty retailer’s loss shrank to $127 million, or $1.09 per diluted share, equaling the consensus estimate of analysts polled by Yahoo Finance, in the quarter ended Oct. 31. That compared with a loss of $146 million, or $1.16 per diluted share, in the same quarter of the prior year.

Revenue fell to $10.2 billion from $10.7 billion in the year-earlier quarter, a decrease of 4.4 percent. This beat the estimate of $9.92 billion by analysts polled by Yahoo Finance.

The reduction in selling and administrative expenses reached $101 million.

The third quarter per-share results were impacted by the repurchase of shares at a cost of $224 million and $358 million respectively in the 13-week and-39-week periods ended Oct. 31, charges of $10 million associated with store closings and severance, domestic pension plan expenses of $44 million, and mark-to-market gains on Sears Canada hedge transactions of $2 million.

Sears Holdings closed seven underperforming stores in the third quarter, versus 14 in the third quarter last year.

“For the holiday season expect a promotion environment likely to keep sales and margins in check. We think Sears is going to have to be aggressive in price to effectively compete with Walmart and Target,” said Kim Picciola, an analyst with Morningstar Inc.

She added, “as the economy recovers and as they close some underperforming stores, we expect sales trends to reverse. We expect sales to turn positive at some point and margins to start to expand.”

Analysts polled by Yahoo Finance estimate earnings of 85 cents per diluted share and sales of $43.13 billion in Sears’ current fiscal year ending in January, compared with earnings of 42 cents per diluted share and $46.8 billion in sales last fiscal year.

The company’s net loss in the 39 weeks ended Oct. 31 was $195 million, or $1.64 per diluted share, compared with a loss of $137 million, or $1.07, per diluted share, in the year-earlier period. Revenue fell 8 percent to $30.8 billion from $33.5 billion.

Sears Holdings stock closed Thursday at $72.95, down $2.82 or 3.7 percent.

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