US: Sears income falls in 'difficult quarter'
US broadline retailer Sears Holdings Corporation has reported net income of US$65m for the second quarter, compared with net income of $173m for the same period last year.
Its second quarter 2008 results included the positive impact of the reversal of a $62m reserve because of the overturning of the previously disclosed adverse jury verdict relating to the redemption of certain Sears, Roebuck and Co. bonds in 2004, the company said.
The decline in its second quarter results from the same quarter last year primarily reflected lower operating results at both Sears Domestic and Kmart, partially offset by improved operating results at Sears Canada, the company said.
For the quarter, Sears Domestic's comparable store sales declined 6.7% while Kmart's comparable store sales declined 5.6%. Total domestic comparable store sales declined 6.2%.
Comparable store sales declined for the quarter across most major categories at both Kmart and Sears Domestic, but continue to be offset by increases in sales of consumer electronics, the company said.
Total revenues declined $0.5bn to $11.8bn in fiscal 2008, as compared to $12.3bn for the second quarter of fiscal 2007, primarily reflecting the impact of lower domestic comparable store sales.
"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," said W. Bruce Johnson, Sears Holdings' interim chief executive officer and president. "While it was a difficult quarter, we were successful in reducing our domestic inventory levels by
$500 million which should lead to lower markdowns and favorably impact our gross margin rates in the second half of the year."
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