Sears outshines Kmart
November 16, 2006-- Home Textiles Today,
Hoffman Estates, Ill. – Getting a big $140 million boost from money it put in the bank, and further buoyed by strong improvement in its Sears U.S. stores which offset weakness at Kmart, Sears Holdings Corp. more than tripled third-quarter profits, which shot up by 237.9% to $196 million $58 million a year ago.
But even without that extra kick from its invested cash, operating profits improved by more than 60.8%, to $550 million from $342 million last year, helped by resurgent Sears units, as the retailer plumped up its margins and cut its costs.
Ongoing sales from its merchandising operations, excluding credit card results, dipped by 1.5% to $11.9 billion from $12.1 billion last year. But the crucial gauge of same-store sales fell even further, by 3.0%. Comps slid down by 4.8% at Sears nameplates, but almost held their own at Kmart units, slipping by 0.7%.
Despite the boost in profits, Wall Street turned its back on the nation's third-largest retailer, driving down its stock by 5.4%, or $9.58 a share, to a still pricey $169.57 per share in late afternoon trading on the big board.
Despite its greater decline in same-store sales, U.S. Sears stores boosted operating profits by 35.5%, to $382 million from $282 million, excluding one-time items like restructuring costs. But Kmart stumbled, its operating profits dipping by almost a third, 32.9%, to $57 million from $85 million. Kmart results were hurt by lower sales and margins, partially offset by lower costs, said Aylwin Lewis, ceo.