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Sears reports bigger-than-expected loss

Hoffman Estates, Ill. - Sears Holdings, parent company of Sears and Kmart as well as 51% stakeholder in Sears Canada, will chop inventory by $500 million this year, part of what has become a routine formula that also includes cutting costs and selling or spinning off assets to raise cash.

After spinning off its Hometown and Outlet stores last year, the company is now considering the sale of its protection agreement business, which sells customer service contracts on major appliances such as washing machines.

"A company of our size and with our assets should be generating a significant profit," said chairman and ceo Eddie Lampert during the company's quarterly conference call yesterday afternoon."

Sears Holdings' first quarter loss was bigger than expected. For the period ended May 4, the company reported a net loss of $279 million, or $2.63 per share, compared to net earnings in the year-ago quarter of $189 million, or $1.78 per share. Store closings, the Hometown/Outlet spinoff and severance costs were partly to blame, the company said.

Consolidated revenue fell 8.8% to $8.45 billion. Combined comp for U.S. Sears and Kmart stores declined 3.6%. Comp at Kmart dropped 4.6%. Comp at Sears U.S. slipped 2.4%.
Lampert acknowledged overarching economic and weather factors impacting the first quarter business, but added: "Having said that, I do not subscribe to the view that the macro factors are the sole reason for our poor performance. They have an impact, but even with that impact, we should be doing a lot better than we are."

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