Broad-line retailer Sears Holdings Corp. (SHLD) reported Thursday a narrower net loss in its third quarter, on an attributable basis, mainly reflecting growth in Kmart's comparable store sales. On an adjusted basis, the company reported a narrower-than-expected loss, and top line, despite a decline, beat market projections. Further, the company said it expects to record an additional charge in the fourth quarter, related to planned store closures.
The Hoffman Estates, Illinois-based company's third-quarter net loss widened to $112 million from prior year's net loss of $111 million. Net loss attributable to shareholders was $127 million or $1.09 per share, narrower than net loss of $146 million or $1.16 per share in the third quarter of 2008.
The latest quarter results included charges for costs associated with store closings and severance of $6 million or $0.05 per share, domestic pension plan expense of $28 million or $0.24 per share, partly offset by mark-to-market gains on Sears Canada hedge transactions of $1 million or $0.01 per share.
The company's prior year results included charges for costs associated with store closings and severance of $15 million or $0.12 per share, charge of $46 million or $0.37 per share related to costs associated with asset impairments, partly offset by mark-to-market gains on Sears Canada hedge transactions of $29 million or $0.23 per share.
Excluding items, adjusted net loss attributable to Holdings' shareholders would have been $94 million or $0.81 per share, compared to a net loss of $114 million or $0.90 per share a year ago.
On average, six analysts polled by Thomson Reuters expected the company to report a loss of $1.09 per share for the quarter. Analysts' estimates typically exclude special items.
Total revenues for the quarter, from merchandise sales and services, decreased to $10.19 billion from $10.66 billion in the year ago quarter, yet beat six Wall Street analysts' consensus revenue estimate of $9.92 billion.
The company attributed the decline in revenues primarily to lower comparable store sales and 56 fewer Kmart and Sears full-line stores, partially offset by an increase of $42 million due to the impact of foreign currency exchange rates. Domestic comparable store sales declined 2.3% in the aggregate for the quarter.
Founded in 1899, Sears Holdings, the nation's fourth largest broadline retailer, operates through three business segments - Kmart, Sears Domestic and Sears Canada.
Kmart's revenues from merchandise sales and services dropped to $3.48 billion from prior year's $3.53 billion. Sears Domestic generated revenues of $5.51 billion in the quarter, lower than last year's $5.83 billion. In Sears Canada (SCC.TO, SEARF.PK), revenues declined to $1.21 billion from $1.30 billion a year ago.
In the quarter, comparable store sales at Kmart edged up 0.5%, primarily driven by the toys and home categories, as well as the impact of assuming the operations of its footwear business from a third party effective January 2009. Meanwhile, Sears Domestic's comparable store sales fell 4.6%, mainly due to decreases in the home appliance, lawn & garden, tools and home electronics categories.
For the quarter, the company's gross profit was $2.77 billion, lower than last year's $2.85 billion. Meanwhile, gross margin, as a percentage of total sales, rose 40 basis points to 27.2% from 26.8% a year earlier. Operating loss was $106 million, compared to an operating loss of $202 million last year.
Commenting on the results, Bruce Johnson, Sears Holdings' interim chief executive officer and president, stated, "We saw some encouraging signs of progress in the third quarter. Comparable store sales increased at Kmart and the decline in sales at Sears moderated during the quarter. Additionally, we increased margin rates and reduced selling and administrative expenses by $101 million. As we approach this important selling season, we are focused on executing our holiday strategy and meeting our customers' needs."
In its preceding second quarter, the home appliance retailer reported a net loss of $86 million, compared to prior year's net income of $85 million, negatively impacted by one-time expenses, as well as lower revenues that reflected drop in comparable store sales and negative impact of foreign currency exchange rates. Net loss attributable to Sears Holdings' shareholders was $94 million or $0.79 per share, compared to net income of $65 million or $0.50 per share in 2008.
Excluding items, net loss was $20 million or $0.17 per share, compared to net income of $28 million or $0.21 per share last year. Sears Holdings' total revenues, from Merchandise sales and services, decreased to $10.55 billion from $11.76 billion a year ago, primarily due to an 8.6% decline in comparable store sales and impact of foreign currency exchange rates.
Among others in the sector, Target Inc. (TGT) reported Tuesday an 18% increase in profit for the third quarter, helped by improved profitability in its retail and credit card businesses. The Minneapolis, Minnesota-based discount-store operator's net earnings were $436 million or $0.58 per share, up about 18.5% from $369 million or $0.49 per share in the prior-year quarter. Total revenues for the quarter edged up 1.1% to $15.28 billion from $15.11 billion last year.
Retail giant Wal-Mart Stores, Inc. (WMT) last week reported a 3.2% rise in profit for the third quarter, helped by productivity initiatives and efficient inventory management at the U.S. segment. Net income attributable to the company was $3.239 billion or $0.84 per share, up from $3.138 billion or $0.84 per share last year. Revenues increased to $99.411 billion from $98.345 billion. Net sales grew to $98.667 billion from $97.619 billion in the third quarter last year. Meanwhile, total U.S. same-store sales for the quarter slipped 0.4% without fuel, compared to a 2.5% growth last year. With fuel, same-store sales decline was 0.8% in the latest quarter, compared to a 2.9% increase last year.
Department store operator JC Penney Co., Inc. (JCP) reported last Friday a sharp fall in profit for the third quarter, reflecting lower comparable store sales as well as higher expenses. The Plano, Texas-based company's net income fell 78.2% to $27 million or $0.11 per share from $124 million or $0.56 per share last year. Adjusted income from continuing operations was $72 million, down 30.1% from $103 million last year, and adjusted earnings per share fell 34.8% to $0.30 from prior year's $0.46. Total net sales were $4.18 billion, down 3.2% from $4.32 billion last year. Comparable store sales declined 4.6% compared to a 10.1% decline in the same period of the prior year.
For the nine months of fiscal 2009, Sears Holdings' net loss was $164 million, wider than prior year's net loss of $62 million. Net loss attributable to Sears Holdings' shareholders was $195 million or $1.64 per share, compared to loss of $137 million or $1.07 per share a year ago. Nine-month revenues, from merchandise sales and services, fell to $30.80 billion from $33.49 billion last year.
Looking ahead, the company said it expect to record an additional charge of approximately $5 million during the fourth quarter of 2009 as the stores it decided to close in the second quarter of 2009 complete operations.
Sears Holdings added that it projects, similar to previous store closings, that the latest store closings will be additive to earnings given that the closure of these stores eliminates negative cash flows incurred from their operations, and will generate cash from the liquidation of inventory and from other proceeds. The company also said it continues to evaluate business in an effort to improve the operating results of the company.
SHLD closed Wednesday's regular trading session at $75.77, down $0.55 or 0.72%, on a volume of 1.97 million shares. In the past 52 weeks, shares have been trading in a broad range of $26.80 to $79.75.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.