Sears expects earnings to top Street

By Associated Press
Posted Jan. 11 at 6:05 a.m.

Sears Holdings Corp. expects its fourth-quarter and full-year adjusted earnings to top Wall Street’s expectations.

The results would be welcomed at the struggling retailer, which saw its third-quarter loss nearly double in part because of weak appliance and clothing sales at its namesake stores. Its shares rose $3.40, or 4.8 percent, to $74 in pre-market trading.

The Edward Lampert-led company, which runs Sears and Kmart stores, predicted on Tuesday that earnings for the year ending Jan. 29 will be between $1.16 and $1.88 per share.

Analysts surveyed by FactSet anticipate lower earnings of 88 cents per share.

For the fourth quarter, Sears expects adjusted earnings of $3.39 to $4.12 per share. That would beat analysts’ $3.12 per share estimate.

The outlooks exclude items such as store closings and impairment charges.

Sears of Hoffman Estates, Illinois, said revenue at stores open at least a year dipped 1.7 percent in December. This figure is a key gauge of a retailer’s health because it excludes sales at stores opened or closed in the past year.

The December results of retailers were closely watched because they included the crucial holiday selling period.

Sears, whose proprietary brands include Diehard, Craftsmen and Kenmore, was expected to face tough competition in December from rivals including Target Corp. and Wal-Mart Stores Inc.

Results for Sears domestic stores dropped 6 percent during the month, while Kmart reported a 2.3 percent increase.

For the quarter to date, revenue at stores open at least a year dipped 1.1 percent, with results at Sears domestic locations off 5.3 percent. Sears quarter-to-date results were hurt by soft sales of consumer electronics, appliances and tools. Among the better performing categories were footwear, jewelry and automotive.

Quarter-to-date results at Kmart climbed 3.4 percent, benefiting from its layaway program as well as strength in the toys, home, sporting goods, apparel and footwear categories. The company said weakness was experienced in the pharmacy, consumables and food categories. Kmart is facing stiffer competition from Target, which has been expanding into fresh food in its general merchandise stores. Wal-Mart has also been adding back thousands of grocery items to its stores.

In the third quarter, Sears Holdings posted a 4.8 percent drop in revenue at stores open at least a year.

Year-to-date revenue at stores open at least a year declined 1.6 percent, again pressured by Sears domestic stores, which fell 3.8 percent. Kmart edged up 0.8 percent for the period.

Sears is not in dire financial straits, as it anticipates ending the fiscal year with cash balances of about $1.1 billion. Sears reported cash balances of $806 million as of Oct. 30.

Sears plans to report its fourth-quarter and full-year results on Feb. 24. The company has about 3,900 full-line and specialty retail stores in the U.S. and Canada.

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