Excluding big charge, Sears' third quarter up
October 20, 2003-- Home Textiles Today,
Picking up a $141 million tab for an overhaul of its Great Indoors chain, including the shutdown of three of those mega-home- furnishings stores, Sears, Roebuck and Co. said third-quarter profits fell by 22.2 percent, to $147 million from $189 million last year.
But getting past the pot hole dug by the ailing chain, and excluding that one-time charge, profits actually jumped up by 42.4 percent, to 84 cents per share from 59 cents a year ago.
Hobbled by declining credit revenues, overall sales were held in check, inching up just 1.3 percent, to $9.8 billion from $9.7 billion last year. But merchandise sales and services rose at a modestly faster pace, climbing by 2.1 percent, to $8.4 billion from $8.2 billion a year ago. Same-store sales in U.S. stores improved by 1.2 percent in the midst of a tricky retail environment.
"The third quarter results were in line with our expectations," said Alan Lacy, chairman and ceo. "We are pleased with our return to sales growth following two years of a fundamental repositioning and restructuring of our core business. While we have much still to do, we believe the business is well-positioned for profitable growth."
In the home group, said Sears, "the lawn and garden and fitness businesses continued to experience strong performances across all formats, while home appliances showed solid improvements in the quarter. Within apparel and accessories, improved merchandise offerings resulted in comp-store sales increases in the women's ready-to-wear, men's and footwear categories."
Lacy singled out Lands' End and Covington for praise. "We completed the rollout of Lands' End merchandise to another 470 stores during the month of September and now carry the brand in all of our full-line stores nationwide. We continue to see a broader sales improvement provided by our Lands' End brands in Sears' full-line stores, as comp-store apparel sales for stores carrying the merchandise out-performed those without," said Lacy.
Lacy added, "Overall sales trends improved during the quarter, reflecting continuing progress against our goals of upgrading merchandise offerings, enhancing the customer experience and improving our marketing efforts."
Sears, Roebuck and Co.
|QTR. 9/27||2003||2002||% CHG|
|Average gross margin and SG&A expenses are calculated as a percentage of the company's merchandise sales and services unit, excluding the credit division.
a–Total sales and services, combining merchandise sales and services and credit revenues. Merchandise sales and services increased by 2.1 percent during the third quarter, to $8.4 billion from $8.2 billion last year. For the nine months, merchandise sales and services increased by 0.4%, to $24.7 billion from $24.6 billion. Credit revenues decreased by 3.1 percent during the quarter, to $1.39 billion from $1.43 billion. For the nine months, credit revenues slipped by 1.7 percent, to $4.1 billion from $4.2 billion.
b–Third quarter net income includes a $141 million pre-tax charge, $89 million after taxes, for a previously announced rethinking of its strategy for the Great Indoors chain, including the shutdown of three units; $2 million in miscellaneous income, down from $10 million a year ago; and a $6 million loss from the company's minority stake in anaother business, compared with a year-before loss of $2 million. Nine-month earnings include the $141 million pre-tax Great Indoors charge, $89 million an after-tax basis; $16 million in miscellaneous income, vs. $98 million last year; and a $16 million loss from the company's stake in another business, compared with a year-before profit of $23 million.
|Oper. Income (EBIT)||1,428,000||1,395,000||2.4|
|Per share (diluted)||0.52||0.59||-11.9|
|Average gross margin||27.0%||28.0%||—|
|SG& A expenses||26.5%||28.4%||—|
|Nine Months||2003||2002||% CHG|
|Oper. Income (EBIT)||4,191,000||4,309,000||-2.7|
|Per share (diluted)||2.17||1.64||32.3|
|Average gross margin||27.2%||27.3%||—|
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