| 02/23/2010 |
GOOD NEWS AT SEARS |
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(AP) -- Kmart shoppers and cost-cutting helped Sears Holdings Corp. boost its profit as the retailer posted its best quarterly profit in three years, the department store chain said Tuesday.
Led by financier Chairman Edward Lampert, Sears has spent years struggling as customers skipped out on its brands for competitors.
But in the fall, business began to turn around at its Kmart discount chain when sales at those stores rose for the first time since 2002 as deal-seeking shoppers returned to stores.
The owner of Sears and Kmart says it earned $430 million, or $3.74 per share, during the fourth quarter. That's up from a profit of $190 million, or $1.55 per share, during the same period last year. Excluding one-time items, the company's fourth-quarter profit amounted to $3.69 per share.
Revenue for the three months that ended Jan. 30 dipped less than 1 percent to $13.25 billion.
Analysts surveyed by Thomson Reuters expected the merchant to earn $3.54 per share on revenue of $12.90 billion.
Those estimates typically exclude one-time items.
Sales in stores open at least a year grew again in the fourth quarter, climbing 1.7 percent at the chain, as shoppers bought toys and products for their home. That's a key measure for retailers because it excludes the effects of newly opened stores.
At the same time, the retailer worked to control expenses and amped up its promotions.
"Our improved performance is especially encouraging given the challenging economic environment, particularly related to big-ticket items," W. Bruce Johnson, Sears Holdings' interim CEO and president, said in a statement.
Sears hasn't had such a strong quarter since the fourth quarter of 2006, when it earned $820 million.
For the full year, Sears earned $235 million, or $1.99 per share. That's up dramatically from its 2008 profit of $53 million, or 42 cents per share.
Full-year revenue slipped 5.8 percent to $44.04 billion, down from $46.77 billion last year.
Separately Tuesday, Lampert released his annual letter to shareholders. The missive, which this year tipped the scales at 13 pages and nearly 7,200 words, is a rare time the typically reclusive billionaire communicates with investors.
In this year's message, Lampert continued to defend Sears' business strategy against critics who've cautioned he's cut expenses and left much of its massive 3,900 stores in poor condition. He also railed against the credit rating system, which he said unfairly gives Sears a rating below many of its competitors.
"When we inquire why our ratings are not higher than some competitors with credit metrics that are weaker than ours, one factor cited is that some analysts prefer their business models," he said. "We increased our earnings, while many others have seen their earnings decline. We have a diversified business portfolio and a significant revenue base and scale. Obviously, we don't agree with all of the critical qualitative conclusions and the quantitative metrics speak for themselves."
He also argued for less government spending and regulation and criticized governments for allowing rival Amazon.com to continue to sell its products without charging sales tax in most states.
"Either we all collect taxes or nobody collects taxes," Lampert wrote. "If state and local governments are going to require retailers like Sears and Kmart to collect sales taxes and not retailers like Amazon.com, they should recognize that over time their sales tax base will erode significantly and that they place companies who have chosen to locate stores locally at a competitive disadvantage."
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