Sears Holdings Reports Deeper Q3 Net Loss

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Hoffman Estates, Ill. - Sears Holdings reported a steeper net loss and lower sales in its fiscal third quarter, ended Oct. 29.

The net loss attributed to Sears Holdings' shareholders in the quarter was $421 million, more than $200 million more than its $218 million loss in last year's fiscal third quarter.

Revenues were $9.6 billion, down slightly from revenues of $9.7 billion in the prior year's fiscal third quarter.

The decline in total revenue for the quarter was primarily a result of a 0.8 percent decrease in domestic comp-store sales and the effect of having fewer Kmart and Sears Full-line stores in operation. Additionally, Sears Canada had a 7.8 percent decline in comp-store sales, which was partially offset by an increase of $35 million due to changes in the Canadian foreign exchange rate.

The domestic comp-store sales decrease included declines of 0.9 percent at Kmart and 0.7 percent at Sears Domestic.

Decreases in sales for the quarter at Sears Domestic were primarily driven by appliances and consumer electronics, the company said.

Beginning with the first quarter of 2011, the company now includes in comp-stores sales online sales from Sears.com and Kmart.com shipped directly to customers. These online sales increased 19 percent over last year and the change resulted in a positive benefit of approximately 40 basis points to total domestic comparable sales for the third quarter.

In a statement Lou D'Ambrosio, Sears Holdings CEO/president, said, "While we are not satisfied with our performance, we saw improvement in some core areas. Sears full-line stores saw improvement, as Sears apparel achieved both comp-store sales and margin rate increases in the quarter. We also saw nearly 20 percent growth in our domestic online business, and while appliance sales declined in the quarter, we improved our market leadership positions in overall appliances and Kenmore." But he cited consumer electronics as one of the areas that was down in the quarter.

D'Ambrosio added, "As we examine every part of our business and take actions to improve our near term performance, we are also investing in our future. These actions include: 1) rolling out innovative technology applications and devices to store sales associates to deliver value to our customers in Sears and Kmart stores; 2) providing our customers with a faster experience, more product choice, and easier ways to purchase, return and exchange using a combination of online, mobile and store based services and 3) expanding our

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membership by investing in and enhancing the features and benefits of the program, including offering all members the opportunity to earn 5 times rewards -- equal to 5 percent back -- everyday when they use their Sears credit card at Kmart and from November through the end of January at Sears."

And D'Ambrosio commented, "We believe it is becoming more and more obvious that the future of retail will revolve around the seamless integration of online and offline experiences. Sears Holdings has the combination of assets that will allow us to play a large and important role in bringing these experiences to all Americans through integrated retail."

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