Sears Comps Plunge 12%

HOFFMAN ESTATES, IL-Same-store sales at Sears Holdings Corp.’s domestic Sears chain plunged 12.2% year over year for the quarter ended Jan. 28, as the company cut promotional activities to improve gross margin and had worse-than-expected apparel sales. Total sales declined 6.1% from the year before, coming in at $10.1 billion.

Meanwhile, the company’s Kmart chain recorded a same-store sales gain of 0.9%, its first quarterly year-on-year increase since the second quarter of 2001, due to higher apparel and home-product sales. However, the chain’s total revenues declined by $200 million, to $5.9 billion, in part due to store closures. The company operated 60 less of the stores since the year before, as 12 closed and the remainder were converted to standalone Sears units.

In a statement to shareholders, Edward Lampert, the company’s chairman, said that same-store sales are not a good barometer to measure Sears’ chains’ performance, since the metric does not take into account improvements put into a store and annual changes in revenues. “While reducing sales is not a prescription for success on a base of healthy, profitable stores, it can be a prescription for success where profit was not the primary objective and where sales came from ‘giving product away’ rather than from providing value to the customer,” he said.