Sears rebounds with 3Q profit
October 29, 2001-- Home Textiles Today,
HOFFMAN ESTATES, IL — Rebounding from a loss in the second quarter, Sears, Roebuck and Co. recorded a third-quarter profit of $262.0 million, down 5.8 percent from $278.0 million last year.
Shoring up the bottom line, operating profits in retail and related services jumped up by 18.8 percent, to $82.0 million from $69.0 million a year ago. But hampered by a growing rate of consumer defaults, operating profits in the credit business grew just 1.0 percent, to $393.0 million from $389.0 million.
Overall sales at the retail giant edged up by 1.7 percent, to $9.8 billion from $9.6 billion, with a big 24.2 percent increase in credit revenues offsetting a 1.3 percent drop in merchandise sales and services, to $8.4 billion from $8.5 billion a year ago. Strong sales gains at The Great Indoors, dealer stores and Sears repair services were offset by declines in full-line stores, the retailer reported.
"Our strong retail earnings growth reflects our heightened focus on bottom-line results," said Alan Lacy, chairman and ceo. "By tightly controlling margins, inventories and expenses, we more than offset lower retail revenues."
In softlines, the retailer said, strong home decor results were driven by the sales of mattresses, which were reintroduced by full-line stores in the second quarter. But gains there were offset by lower sales in other softlines categories, the company added.
Still tugging at the bottom line, and holding profits in check, was a big jump in uncollectible accounts from debt defaults on Sears credit cards. The retailer has set aside $377 million for bad consumer debt, up 88.5 percent from $200 million last year.
Sears, Roebuck and Co.
|Qtr. 9/30 (x000)||2001||2000||% CHG|
|a-Total sales for the third quarter, including $1.4 billion in credit and financial product revenues, up 24.2 percent from the prior year. Nine-month sales include $3.8 billion in credit revenues, up 11.4 percent from $3.4 billion in 2000. b-Third-quarter results include a $377 million provision for uncollectible accounts, up 88.5 percent from $200 million a year ago; and miscellaneous income of $22 million, up from $1 million the prior year. c-Nine-month results include a $929 million provision for uncollectible accounts, up 40.8 percent from $660 million the preceding year; a $552 million provision for previously securitized receivables; $287 million in special charges and impairments; and miscellaneous income of $30 million, up from $7 million a year ago.|
|Per share (diluted)||0.80||0.81||-1.2|
|Average gross margin||25.9%||25.9%||—|
|Oper. income (EBIT)||3,184,000||3,037,000||4.8|
|Per share (diluted)||0.73||2.57||-71.6|
|Average gross margin||25.9%||26,0%||—|