Hoffman Estates, Ill. — Sears Holdings reported a net loss of $56 million for its first quarter, ended May 3, with major appliance sales being particularly disappointing.
During last year’s first quarter the retailer had a net income of $223 million. The prior year's quarterly results included the net favorable impact of certain significant items, Sears said.
W. Bruce Johnson, interim CEO/president, said in a statement, "Our first-quarter results reflect the difficult economic environment and intense competition for consumer business. That said, since May 3, 2008, our sales declines have moderated somewhat."
For the quarter, Sears Domestic's comp-store sales declined 9.8 percent while Kmart's comp-store sales declined 7.1 percent. Total domestic comp-store sales declined 8.6 percent. The comp-store sales declines at both Kmart and Sears Domestic continue to reflect increasing competition and weakness in the general economy and housing market, as well as the impact on our customers of the increased costs of consumer staples such as food and gas, Sears said.
Its comp-store sales declined for the quarter across most major categories at both Kmart and Sears Domestic, most notably within the home appliance, lawn and garden, and apparel categories. For the quarter, total revenues declined $600 million to $11.1 billion in fiscal 2008, as compared with $11.7 billion for the first quarter of fiscal 2007.
For the quarter, Sears reported an operating loss of $8 million in fiscal 2008, as compared with operating income of $409 million in the first quarter of fiscal 2007, mainly due to lower gross margin generated at both Kmart and Sears Domestic. The chain said, “Given that we do not expect any significant near-term improvement in the overall retail environment, we believe that our sales and gross margin for the balance of fiscal 2008 will likely continue to be pressured by the above-noted unfavorable economic factors.
Sears also said its board has approved the repurchase of up to an additional $500 million of the company's common shares. This authorization, when added to the $143 million remaining as of May 3, under previous authorizations, provides the company with a current aggregate authorization of $643 million.