Hoffman Estates, Ill. - Lower CE sales and slimmer margins led Sears Holding's fourth-quarter earnings down 13 percent to $374 million.
Results were also pressured by store closing, severance and pension plan costs, the company said.
Net sales slipped 0.8 percent to $13.1 billion for the three months ended Jan. 29, which reflected a 1.2-percent decrease in comp-store sales and 34 fewer Sears and Kmart stores year-over-year.
At Sears, net sales declined nearly 3 percent to $6.7 billion while comps fell 4.5 percent. More than half of the comp decrease was in consumer electronics, the company said.
Net sales at Kmart declined 2 percent to $4.9 billion while comps increased 2.5 percent, driven by gains across most product categories. Inventory was about $270 million higher at the end of the quarter, due to increased levels of CE, toys and other categories, Sears said.
In an open letter to shareholders, chairman Edward Lampert called Sears' results "completely unacceptable," and said steep price declines in CE, particularly TVs, must be offset "by adding new innovative products and bundling them with services and solutions that meet customers' evolving needs."
The company's performance in appliances was similarly unacceptable, he said, given Sears' market share dominance and broader brand selection. But the macroeconomic challenges facing the majap industry were compounded by "our own missteps," including delays in transitioning to its newly redesigned Kenmore line.
Lampert noted that the company is investing in its loyalty program, its online and mobile shopping platforms, and its technology and information infrastructure, and is also focused on expanding its specialty channel of smaller Hometown and Outlet stores, having added 122 locations in 2010.
Separately, the company named former Avaya chief executive and Sears consultant Lou D'Ambrosio as president/CEO, effective today. He succeeds W. Bruce Johnson, who served as interim CEO and president for the past three years. Johnson returns to his prior role as supply chain executive VP, with additional responsibility for off-mall businesses.