Sears Posts $9M Loss

The company, based in Hoffman Estates, IL, lost 7 cents a share on total sales of $7.63 billion with comparable sales falling 3.7% at Kmart and 3.1% at Sears during the first quarter ending April 30. The results include 13 weeks of financial performance for Kmart and five weeks for Sears following the pair's merger on March 24. The first quarter results were skewed by the acquisition, completed in the middle of the reporting period, and also included a $90 million for an inventory accounting change. If those items were removed from the calculations, Sears Holdings would have posted a quarterly profit of $81 million or 65 cents a share.

The two retailers have been facing tough competition from Bentonville, AK-based Wal-Mart Stores Inc. and other rivals, as they struggle to boost declining sales. For stores opened at least a year, Kmart saw sales drop in the last 14 quarters while Sears suffered sales declines in 12 of the last 16 quarters.

Despite the company's lackluster performance, Edward S. Lampert, the firm's chairman, vowed to keep a tight grip and costs and said in a letter to investors that the firm would continue to pursue investment and acquisition opportunities. He said the company also would spend money to convert some Sears stores into Sears Essentials, which carry Sears branded appliances, tools and some grocery items.

"We will opportunistically pursue investments in, and acquisitions of, other companies, joint ventures and strategic alliances. We believe that we will have significant opportunities in the years ahead to create value through a combination of better operating performance and disciplined use of our capital and balance sheet," said Lampert, who engineered Kmart's bankruptcy reorganization and used the retailer to acquire Sears for $12.3 billion.

The announcement of the loss sent the firm's stock down by more than $11 to $142.60 by late afternoon Tuesday. The company, whose merger created the nation's third largest retailer, operates 2,300 full-line and 1,200 specialty store in the United States and 340 stores in Canada.