Sears Holdings said Thursday that it lost money in its second quarter — missing expectations — as it was dragged down by lower sales, store closings, and severance and pension plan costs.
The retailer, owns Sears and Kmart stores, lost $94 million, or 79 cents a share, for the period ended Aug. 1. That compares with a profit of $65 million, or 50 cents a share, a year ago.
Excluding items such as a 32 cents-a-share charge for store closings and severance, and a 22 cents-a-share charge for domestic pension plan expenses, Sears shld had a loss of $20 million, or 17 cents a share.
The retailer closed 28 underperforming stores in the quarter and said it expects an additional charge of about $5 million in the second half of the year as stores closed in the quarter wind down their operations.
Revenue at the company led by financier Edward Lampert fell 10% to $10.55 billion on the stronger dollar and same-store sale declines.
Analysts polled by Thomson Reuters forecast profit of 35 cents a share on revenue of $10.73 billion. Analysts' estimates generally exclude one-time items.
The retailer's Sears U.S. sales at stores open at least a year dropped 12.5%, hurt by the ongoing housing downturn and soft apparel sales. The figure dipped 3.9% for Kmart, also on its weak apparel performance.
The pullback in spending on clothes is not uncommon for retailers during the recession, as shoppers are tightening their purse strings and gravitating toward getting more value from their dollar at discount-oriented businesses.
Sales at stores open at least a year, a key indicator of retailer performance known as same-store sales, measure growth at existing stores rather than newly opened ones.
Sears, whose brands include Kenmore, Craftsman and DieHard, looked for ways to improve its financial performance by paring inventories and cutting costs. Merchandise inventories fell to about $9.4 billion from $9.8 billion, while domestic inventory levels declined to $8.6 billion from $8.9 billion.
Total costs and expenses dropped to $10.61 billion from $11.58 billion.