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Sears scales back guidance

Hoffman Estates, IL — Sears, Roebuck & Co. this morning ratcheted back its full-year earnings estimates even as it posted higher earnings in the second quarter.

The company reported net income of $309 million, or $1.04 per share, for the quarter, compared with $229, or $0.71 per share, for the same period a year ago. Second quarter earnings included a pretax gain of $93 million, or $0.20 per share, on the sale of previously charged-off credit card accounts, partially offset by a pretax charge of $28 million, or 6 cents per share, for severance costs associated with a productivity improvement program to further streamline the company's home office and field operations.

Sears' retail business recorded an operating income of $183 million, plunging sharply from $300 million last year.

Revenues for the second quarter were $7.8 billion, an increase of 0.9 percent over the same period last year. A revenue increase from the addition of Lands' End, which was acquired in June 2002, was partially offset by revenue decreases in retail stores. Comparable store sales for the quarter declined 3.5 percent.

In retail and related services, Sears said it anticipates full-year operating income will be about flat with the prior year, assuming comps of flat to up low-single digit in the second half. But the company said it expects full-year EPS to be between $4.80 and $5.00 compared with its previous forecast between $4.95 and $5.15. The estimates exclude any effects from the sale of the credit and financial products business.

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