Blog: Leonie BarrieSears slumps

Leonie Barrie | 30 May 2008

The market hadn’t been expecting great things from Sears Holdings this quarter, but the retail group’s swing to a $56m loss surpassed even the lowest forecasts. And things could have been a lot worse. Excluding gains from the sale of assets, the company's loss would have been $0.10 a share higher the loss of $0.43 per share it actually reported – but a far cry from the earning of $1.45 a share posted a year earlier.

Adding to its woes, a 5.8% drop in sales as customers took their dollars to rival retailers, and increased discounts to clear merchandise, meant gross margin rate fell by 90 basis points to 27.3%. Worryingly, demand weakened across most major categories, Sears said, especially apparel.

Patience finally seems to be running out with hedge fund manager Edward Lampert who has controlled the retailer since 2005. Sears is simply using the challenging economy as an excuse for poor performance, and a lack of investment in remodelling its stores and improving its merchandise, observers say.
 
They also question the disparity between statements from the department store chain that the retail environment is unlikely to improve, but its full-year earnings before interest, taxes, depreciation and amortization are likely to rise from the previous year. Does this mean more cost cuts – in either marketing or staffing – could be in the pipeline?

Weak economy blamed as Sears posts $56m Q1 loss


BLOG

Trump spares textile machinery in tariff spat

Hundreds of US imports from China will be hit with an additional 25% tariff from next month – but to the relief of the US textile, apparel and footwear industry, most of the equipment used in the dome...

BLOG

Esquel's eco-friendly manufacturing complex

Hong Kong-based Esquel Group, the world's largest woven shirt maker, has been bedding-in operations at a ground-breaking new $313.3m eco-friendly manufacturing complex in southern China....

BLOG

Tariffs back at top of Trump's trade agenda

Tariffs soared back to the top of Trump's trade agenda last week, with the imposition of punitive tariffs on imports of steel and aluminium, and plans to proceed with an additional 25% tariff on impor...

BLOG

Digitalisation goalposts constantly evolving

The debate and discussion around digitalisation continues to top the apparel industry’s agenda – but as Spencer Fung, group CEO of Li & Fung explains, the goalposts are constantly evolving....

just-style homepage



Forgot your password?