Sears Holdings narrows loss in second quarter
Hoffman Estates, Ill.-based retail giant Sears Holdings posted a net loss of $39 million in the second quarter—a big improvement over the $94 million loss posted in the same quarter last year.
Comparable-store sales at U.S. Kmart and Sears stores slipped 2.2%. Comps fell 2.8% at Sears Domestic, with weakness in power lawn and garden, tools and consumer electronics, the company said.
Revenues for the company and its 3,900 full-line and specialty retail stores in the United States and Canada were $10.458 billion, down slightly from $10.551 billion in the same quarter last year.
“Kmart continued to improve its performance during the second quarter, as an improvement in its gross margin rate led to increased profitability,” said W. Bruce Johnson, Sears Holdings’ interim CEO and president. “Overall, our total revenues declined only slightly despite the uncertain economic environment faced by our customers. Expense discipline remained constant in the second quarter as reductions in selling and administrative expenses were achieved even as we continued to invest in initiatives designed to improve our customers’ experiences.”
He pointed to investments on multichannel retailing offerings and the launch of the “Shop Your Way Rewards” program as two key initiatives. Under the rewards program, 1% of purchases at Kmart, Sears and mygofer.com are refunded in the form of store credit to the customer’s loyalty card.
The decline in total revenue for the quarter was primarily a result of a 2.2% 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 $96 million due to changes in the Canadian foreign exchange rate.
A decrease in gross margin rate of 40 basis points at Sears Domestic was primarily due to reduced margins in home services, and a decrease in gross margin rate of 150 basis points at Sears Canada, the company said.
Operating income for the second quarter of 2010 and 2009 includes expenses of $37 million and $103 million, respectively, related to domestic pension plans, store closings and severance.
Pending home sales rise modestly in July
The Pending Home Sales Index, a forward-looking indicator, rose 5.2% to 79.4 based on contracts signed in July from a downwardly revised 75.5 in June, according to the National Association of Realtors (NAR).
The index, released Thursday, is 19.1% below June 2009 when it was 98.1. The data reflects contracts and not closings, which normally occur with a lag time of one or two months, according to the NAR.
Lawrence Yun, NAR chief economist, cautioned that there would be a long recovery process. “Home sales will remain soft in the months ahead, but improved affordability conditions should help with a recovery,” he said. “But the recovery looks to be a long process. Home buyers over the past year got a great deal, and buyers for the balance of this year have an edge over sellers. For those who bought at or near the peak several years ago, particularly in markets experiencing big bubbles, it may take over a decade to fully recover lost equity.”
Suspects stalled by flat tires
Two men suspected of stealing power tools from a Southern California Home Depot were arrested on Aug. 20 after their getaway vehicle developed two flat tires.
Deputies from the Victorville Police Station, summoned by store personnel, arrived at the Home Depot on Bear Valley Road shortly before noon to find a black SUV leaving the scene. One suspect attempted to drive the car, which had two flat tires, along an adjoining road but soon fled the vehicle on foot. He was arrested by sheriff deputies.
Asecond suspect was detained in the parking lot of the store.
Inside the SUV, law enforcement officers found electric drills valued at more than $2,000 that had been allegedly stolen earlier that day at another Home Depot store in Victorville.
Arrested for commercial burglary were Jose Munoz, 34, and Rolando Martinez, 39, both from Los Angeles. The suspects are known gang members, according to authorities.
Karen Hunt, a spokeswoman for the Victorville Sheriff’s Department, told Home Channel News that the commercial burglary charges stem from the suspects’ “intent to steal,” as opposed to “spur of the moment” shoplifting. As for the flat tires, “They tried to drive over an embankment in order to get away the deputies and loss prevention [personnel],” Hunt said.