One-time charges lead to $197M loss at Sears

Don Hogsett, July 23, 2001

Hoffman Estates, IL — Weighed down by $809 million in pre-tax charges — partly to cover the cost of shutting down its HomeLife stores and quitting the cosmetics business — Sears, Roebuck and Co. recorded a second-quarter loss of $197 million, in line with expectations, compared with a prior-year profit of $388 million.

Overall sales, including the company's big credit business, jumped up by 1.8 percent, to $10.2 billion from $10.0 billion, spurred by a hefty 18 percent boost in credit and financial products sales.

In its core retail operations, sales at the retail giant held relatively steady, slipping by 1.1 percent, to $7.8 billion from $7.9 billion a year ago. Sales increases at The Great Indoors, automotive stores, dealer stores, hardware stores and Direct to Consumer, were offset by declines in the company's full-line stores. The retail business posted an operating profit of $213 million, down 5.3 percent from $225 million last year, pressured by rising costs, notably stemming from the company's investment in the highly successful The Great Indoors format.

"Despite a very challenging retail environment, we delivered second-quarter results that were in line with our expectations," said chairman and ceo Alan Lacy. "In our core retail operations, we were very effective in tightly managing inventories and costs. In addition, our credit business achieved solid growth in receivables while maintaining strong overall credit quality."

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