Comparable-store sales fall at Sears
Sears Holdings announced today that domestic comparable-store sale for its second quarter fell 4.3 percent at Sears stores and 3.8 percent at the company’s Kmart stores. The company will release its official second-quarter results by Aug. 30.
Sears said it anticipates second-quarter net income of between $170 million and $185 million. Last month, the company forecast net income in the range of $160 million to $200 million. The company reported net income of $294 million in last year’s second quarter.
Since that earlier forecast, “the company has experienced higher markdowns, most notably within seasonal apparel categories,” according to a press release from Sears.
Sales fell “across most categories,” the company said, with some increases in consumer electronics, women’s apparel and footwear. The company saw a second-quarter pre-tax gain of $15 million from items including bankruptcy-related settlements and insurance recoveries on claims filed for property damaged by hurricanes during fiscal 2005.
Sears Holdings’ CEO Aylwin Lewis said while the company recognized the slowdown in the housing market contributed to declining sales, “we are disappointed with our second-quarter results.”
“We will work hard to improve our financial performance going forward,” Lewis said.
The company also said its board of directors approved a plan to buy back up to $1.5 billion of stock.
Sears is the fourth largest home channel retailer in the United States, according to HCN’s Top 500 list of home channel retailers, with 2006 home improvement sales of $10.7 billion.
All eyes on Wall Street
The bears were out in force on Wall Street Thursday, as markets appeared to be spooked by a French bank’s effort to freeze three funds that invested in the United States subprime mortgage market. Particularly hard hit on the financial markets yesterday were home channel stocks.
Of 16 major home channel and home-related companies tracked by Home Channel News (see below), only Tractor Supply and Andersons showed gains on Thursday. The decliners were led by two-step distributor Huttig Building Products, down 16.09 percent on the day, and home improvement product manufacturer Masco, down 7.17 percent. (Read more here.)
Among retailers, Home Depot was down 5.32 percent. The company Thursday said, “in view of current financial market conditions” it may need to renegotiate the terms of its previously announced sale of its HD Supply division to three private equity groups. (Read more here.) Number-two home center retailer Lowe’s was down 3.65 percent, on the same day it announced it was losing Doug Robinson, who was in charge of its Canadian operations. (Read more here.)
As the stock markets were leaking, United States retailers reported moderate growth for the month of July, when same-store sales grew 2.6 percent, according to the tally from the International Council of Shopping Centers (ICSC). The housing market figured heavily in the analysis from Michael Niemira, ICSC’s chief economist.
“As we have noted earlier this year, a consumer ‘soft patch’ began in February 2007, and the latest data suggested it continued through July,” he said. “The housing market drag continues to dampen consumer demand and with it the overall economy.”
While Wal-Mart’s same-store sales for July increased 1.9 percent, its shares fell more than 4 percent, its biggest single-day drop in four years.
Following Thursday’s 2.96 percent decline of the S&P 500 Index and a 2.83 percent decline in the Dow Jones industrial average, the markets stopped the bleeding on Friday. The Dow closed down a mere 0.23 percent, and the S&P 500 actually increased slightly.
Home Depot: 35.92, up 0.36%
Sears Holdings: 133.10, up 2.46%
Lowe’s: 27.76, up 1.20%
BlueLinx: 8.10, up 0.12%
Weyerhaeuser: 66.42, up 0.23%
BMHC:14.23, up 9.04%
Builders FirstSource: 14.20, up 5.73%
Stanley Works: 56.55, up 0.69%
Black & Decker: 89.68, up 0.09%
Sherwin-Williams: 69.14, up 4.68%
Huttig: 5.17, down 3.72%
Masco: 25.78, down 0.96 %
Wolseley: 20.60, down 2.60%
Wal-Mart: 46.07, down 0.82%
Andersons: 49.04, down 3.33%
Tractor Supply: 48.98, down 3.96%
Canadian Tire sales up 5.1 percent
Canadian Tire, the Canadian home improvement and automotive retail chain, had second-quarter net earnings of $122.3 million, up 18.4 percent from $103.3 million last year.
Sales rose 5.1 percent, to $2.84 billion from $2.7 billion last year.
“All of our businesses contributed to our sales growth during the quarter,” said Tom Gauld, president and CEO. “Canadian Tire Retail’s sales, while impacted by unseasonable weather in the month of April, strengthened significantly in May and June.”
In the quarter, Canadian Tire introduced a new store format, called the “20/20” store format. The 15 stores, located in the north- and south-shore areas of Montreal, represent the “largest single conversion of stores in the company’s history,” Canadian Tire representatives said in a statement.
Changes to the stores include an expansion of the company’s core product assortment, a new store design, new floor layout and added product categories. The goal of the stores’ redesigns is to increase retail sales by 20 percent on average, the company said.
The company noted that it expects third-quarter earnings to be relatively flat compared with 2006, due to store openings and expenses from growth initiatives, followed by a strong fourth quarter.