Sears posts hefty Q1 loss
Battered retailer Sears Holdings Corp. posted its largest quarterly loss Thursday since Sears and Kmart combined, providing surprising results far below Wall Street forecasts and issuing a dour sales forecast for the remainder of the year.
The company said it lost $56 million, or 43 cents per share, in its first quarter as it fought for shoppers and cut prices to clear merchandise from store floors – a dramatic reversal from the retailer’s year-ago profit of $223 million, or $1.45 per share.
“It was a pretty ugly quarter,” said Morningstar analyst Kim Picciola. “All in all, not only are they facing the challenges from the uncertain macro environment, but they’re still struggling internally from some of their own issues. And I think that shows in the results.”
On an adjusted basis, Sears reported a loss of 53 cents per share for the three months ending May 5, compared with profits of $1.15 per share in the same period last year.
Led by financier Edward Lampert, who acquired Kmart in 2003 and Sears, Roebuck and Co. in 2005, Sears is in the midst of a high-stakes restructuring.
It said Thursday that customers were forced to spend more money to cover the soaring costs of gas and food. That knocked down sales nearly 6 percent to $11.1 billion.
In other earnings reports Thursday:
•Costco Wholesale Corp. reported a 32 percent jump in its fiscal third-quarter profit, topping Wall Street expectations, as cash-squeezed customers flocked to its warehouse clubs in search of bargains on food and toiletries.
Costco said net income rose to $295.1 million, from $224 million a year ago, which included a $30.3 million charge.
Sales increased 13 percent to $16.26 billion from $14.34 billion in the year-ago period. Including membership fees, revenue rose to $16.61 billion from $14.66 billion.
•Soaring commodity costs prompted H.J. Heinz Co. to raise prices on a host of consumer products, helping the foodmaker post a 7.2 percent increase in fourth-quarter earnings. The company also boosted its dividend.
The Pittsburgh-based maker of Heinz ketchup, Weight Watchers products and Ore-Ida potatoes said commodity costs rose by 8 percent in the year and expects similar increases for the next two years – foreshadowing continued higher food prices for consumers.
In the quarter, Heinz earned $194.1 million, compared with $181 million a year earlier. Sales rose by 11 percent to $2.69 billion, driven by strong sales in Heinz’s top 15 brands. Prices rose 4.5 percent while sales volume went up by 1.2 percent.
For fiscal 2008, earnings rose to $844.9 million, from $785.8 million a year earlier.
The company introduced more than 200 new products, many of which centered on health by offering lower salt, sugar and fat content.