Thursday, broadline retailer Sears Holdings Corp. (SHLD) reported a 62.4% fall in profit for the second quarter, due to lower sales and comparable store sales on increasing competition and slowing economy. Looking ahead, the company expects flat to modest comparable store sales decline for the rest of the year, and higher EBITDA in the second half. Further, the company lowered its full year EBITDA forecast.
Net income was $65 million or $0.50 per share in the second quarter, lower than $173 million or $1.15 per share recorded in the same quarter last year.
The second-quarter 2008 results included the positive impact of the reversal of a $37 million or $0.29 per share reserve. Excluding the item, earnings per share were $0.21 for the second quarter of fiscal 2008.
On average, five analysts polled by First Call/Thomson Financial expected earnings of $0.33 per share for the quarter.
Bruce Johnson, Sears Holdings' interim chief executive officer and president said, "Our second quarter results reflect the continued effects of a slowing economy which contributed to the earnings declines we have experienced since the third quarter of 2007."
For the quarter, total revenues from merchandise sales and services declined to $11.76 billion from $12.26 billion a year ago, primarily impacted by lower domestic comparable store sales. Three Wall Street analysts' average revenue estimate was $11.71 billion.
Total domestic comparable store sales declined 6.2%. For the quarter, Sears Domestic's comparable store sales declined 6.7%, and Kmart's comparable store sales dropped 5.6%, reflecting increasing competition and weakness in the general economy.
In the quarter, gross margin rate decreased approximately 120 basis points to 26.5% from 27.7% last year. The company's operating income fell to $187 million from $332 million in 2007, despite lower operating expenses, mainly due to lower gross margin generated at both Kmart and Sears Domestic.
The company noted that it plans to file quarterly report on Form 10-Q for the second quarter with the SEC on or about August 29.
Looking ahead, Sears Holdings said it expects higher EBITDA in the second half compared to last year, benefited from lower domestic inventory levels and continued vigilant expense management.
Johnson added, "Given our year-to-date results and the state of the economy, our current full-year EBITDA forecast, which assumes flat to modest comparable store sales declines for the rest of the year, is comparable to, but no longer exceeds, last year's EBITDA."
Previously, the company had expected higher EBITDA in fiscal 2008, helped by its cost controlling actions.
SHLD closed Wednesday's regular trading session at $86.98, down $0.64, on a volume of 2 million shares.
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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.