Sears Holdings Posts Q1 Loss of $170M as Sales Drop
May 19, 2011,
HOFFMAN ESTATES, Ill.-As it had predicted in a statement issued earlier this month, Sears Holdings reported a first-quarter net loss of $170 million, compared with net income of $16 million in last year's first quarter.
The company attributed the red ink primarily to sales declines at its Sears, Kmart and Sears Canada stores. Same-store sales in its U.S. stores fell 3.6 percent, including a drop of 5.2 percent in same-store sales at Sears and a 1.6 percent fall in Kmart comparable-store sales. At Sears Canada, same-store sales plummeted 9.2 percent. Overall net sales for the corporation dropped 3.4 percent to $9.7 billion for the quarter, which ended on April 30.
Lou D'Ambrosio, who became Sears Holdings president and CEO in February, acknowledged that the weak economy and unfavorable weather during the quarter made their presences felt. "However, we also fell short on executing with excellence," D'Ambrosio said. "We cannot control the weather or the economy or government spending. But we can control how we executive and leverage the potent assets we have."
In terms of merchandise departments, home was one of the bright spots at Sears' U.S. stores, posting sales increases along with sporting goods, jewelry and footwear. But sales drops in appliances, apparel and consumer electronics offset these gains.
The sales decline depressed gross margin by 140 basis points to 26.8 percent. Selling, general and administrative expenses were flat in total dollars but increased 100 basis points as a percentage of sales to 26.4 percent.
D'Ambrosio said Sears Holdings is taking actions to leverage its "suite of assets" to reverse the company's course going forward. This includes "extending our leadership position in appliances; capitalizing on the scope of our portfolio and marquee brands such as Kenmore, Craftsman, DieHard, and Lands' End; extending our lead in home services; revitalizing our Sears' apparel business; and delivering an extraordinary customer experience at the store, online and in home," he said.