Kmart stock rises after profit report
Shares of Kmart Holding Corp. surged 17 percent Monday after the discount retailer reported a profit for the second quarter and said chairman and majority owner Edward Lampert is free to invest the company’s $2.6 billion in surplus cash.
There long has been speculation that Lampert plans to gradually dismantle Kmart as a retailer and turn it into an investment empire akin to Warren Buffett’s Berkshire Hathaway.
The fact that Lampert is being given the authority to make investment decisions, revealed in a quarterly report to the U.S. Securities and Exchange Commission, boosts that theory and helped propel Kmart stock to a gain of $11.15 a share to $76.05 in Nasdaq stock market trading.
Even as Kmart continues to lose market share to Wal-Mart Stores Inc. and Target Corp., investors are betting that “maybe he can turn this into something different,” said Marisa Lenhard, a retail analyst at Southfield, Mich.-based Sigma Investment Counselors.
Kmart earned $155 million, or $1.54 per share, during the three months ending July 28. That compared with a loss of $5 million in the same quarter last year. It was the retailer’s third consecutive quarterly profit since emerging from bankruptcy in May 2003.
• Lowe’s Cos. Inc. reported an 18 percent jump in second-quarter income and boosted its earnings outlook based on what it called continuing strength in the nation’s housing market.
The nation’s second-largest home-improvement chain boosted its third-quarter earnings outlook to between 65 cents and 66 cents a share compared with the 64 cents projected by analysts polled by Thomson First Call.
Lowe’s earned $704 million, or 89 cents a share, in the three months ending July 30. That compared with $597 million, or 75 cents per share, in the year-ago period.
Analysts surveyed by Thomson First Call had expected 91 cents for the second quarter.
Lowe’s sales in the quarter increased 17 percent to $10.2 billion, up from $8.7 billion a year ago.
• Food distributor Sysco Corp.’s fiscal fourth-quarter profit rose 16 percent due to an extra week in the quarter, customer-service initiatives and operating efficiency.
Sysco reported earnings Monday of $280.6 million, or 43 cents a share, for the 14 weeks ending July 3, up from $242.7 million, or 37 cents a share, in the fourth quarter a year ago.
A Thomson First Call survey of analysts had projected fourth-quarter earnings of 45 cents a share.
Fourth-quarter sales increased 17 percent to $8.14 billion from $6.97 billion last year. Adjusted for the difference in quarter lengths, sales rose 8.4 percent.