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Sears Reports $279 Million Loss For Q1

Sears Holdings Corporation reported a net loss of $279 million for the first quarter of 2013 compared to net income of $189 million in the prior year quarter. Comparable store sales declined 3.6% for the quarter with the company citing, “a cooler spring than last year,” as a contributory factor. The company reported adjusted EBITDA of $(8) million for the first quarter of 2013 compared to $160 million in the prior year quarter.

“Our recent financial performance has not been acceptable, although we have seen some positive momentum as sales per member increased and our online business grew 20% in the quarter,” said Eddie Lampert, Sears Holdings’ Chairman and CEO. “During the quarter, we have accelerated our activity to transform Sears Holdings into a leading Integrated Retailer that fosters relationships with members through our ‘Shop Your Way’ platform. We launched new mobile capabilities, like Member Assist, which allows our members to communicate directly with our consultative store sales staff remotely in a manner most convenient for our members. We believe that if we leverage technology to provide our members with the easiest, most seamless shopping experience possible, we will be successful.”

The company also reported that its gross margin rate decreased 220 basis points for the first quarter of 2013 compared to the prior year first quarter.

Revenues decreased $818 million to $8.5 billion for the quarter, compared to revenues of $9.3 billion for the comparable year-earlier period. The company attributed the decrease to the effect of having fewer Kmart and Sears Full-line stores in operation, lower comparable store sales and the separation of the Sears Hometown and Outlet businesses, which occurred in the third quarter of 2012.

In a statement announcing its financial results the company stated, “We recorded revenues from Sears Hometown and Outlet Stores, Inc. (SHO) of approximately $430 million, primarily related to merchandise sold to SHO for resale, in the first quarter of 2013. The prior year quarter included revenues of approximately $620 million related to the Sears Hometown and Outlet businesses’ merchandise sales to its customers. Domestic store closures accounted for approximately $375 million of the decrease from the prior year quarter. First quarter revenues also included a decrease of $19 million due to foreign currency exchange rates.”

For the quarter, domestic comparable store sales declined 3.6%, comprised of decreases of 4.6% at Kmart and 2.4% at Sears Domestic. The decline at Kmart reflects decreases in most categories, with the largest declines occurring in categories such as grocery & household, pharmacy and drugstore. The decline at Sears Domestic of 2.4% predominately was driven by weather related declines in the lawn & garden category. Excluding lawn & garden, comparable store sales would have increased 0.3%. This slight increase was due to increases in the apparel and home categories, which were partially offset by declines in the consumer electronics and tools categories.