Sears suffers big 3Q loss, increase in tire sales
Sears Holdings Corp. posted a net loss of $218 million on sales of $9.7 billion for its third quarter ended Oct. 30, 2010. That compares to a net loss of $127 million on sales of $10.2 billion for the same period last year.
The company also recorded an operating loss of $292 million versus a $106 million loss in 3Q 2009. The increase was "primarily the result of a decline in sales coupled with a margin rate reduction of 80 basis points," according to the company.
"While Kmart improved profitability, our third quarter results were disappointing, in large part due to lower sales of apparel and appliances at Sears," says W. Bruce Johnson, Sears Holdings' interim chief executive officer and president.
"Our seasonal apparel sales were down, with the unusually warm weather being a contributing factor. Additionally, during the quarter we reduced our usage of short-term borrowings as we issued $1.25 billion of 6-5/8% senior secured notes. As such, we had no borrowings outstanding on the revolver in contrast to last year's balance of $1.3 billion."
The decline in total revenue for the quarter was primarily a result of a 4.8% decrease in domestic comparable store sales and the effect of having fewer Kmart and Sears full-line stores in operation, partially offset by an increase of $54 million due to changes in the Canadian foreign exchange rate.
The domestic comparable store sales decrease included a decline of 8.2% at Sears Domestic. The sales decline was primarily driven by declines in the home appliances, apparel, and consumer electronics categories, all of which experienced a greater decrease in the month of October.
Sears footwear, jewelry, home categories and tires experienced comparable store sales growth during the quarter.
For the first 39 months of its fiscal year, Sears Holdings recorded a net loss of $241 million on revenues of nearly $30.2 billion.