Sears Holdings Corp Earnings Cheat Sheet: Shrinking Margins for Fifth Consecutive Quarter

S&P 500 (NYSE:SPY) component Sears Holdings Corporation (NASDAQ:SHLD) reported its results for the third quarter. Sears Holdings is a retail conglomerate with full-line and specialty retail stores in the United States and Canada. It is the holding company of Kmart Holding Corporation and Sears, Roebuck and Co. Its three reportable segments are Kmart, Sears Domestic and Sears Canada.

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Sears Holdings Earnings Cheat Sheet for the Third Quarter

Results: Loss widened to $421 million ($3.95 per diluted share) from $218 million (loss of $1.98 per share) in the same quarter a year earlier.

Revenue: Fell 0.8% to $9.6 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: SHLD reported an adjusted net loss of $2.57 per share. By that measure, the company fell short of the mean analyst estimate of a loss of $2.14 per share. Analysts were expecting revenue of $9.57 billion.

Quoting Management: Lou D’Ambrosio, Sears Holdings’ Chief Executive Officer and President, said, “While we are not satisfied with our performance, we saw improvement in some core areas.Sears Full-line Stores saw improvement, as Sears apparel achieved both comparable store sales and margin rate increases in the quarter. We also saw nearly 20% growth in our domestic online business, and while appliance sales declined in the quarter, we improved our market leadership positions in overall appliances and Kenmore.Despite improvement in these areas, our overall results were down, led by declines in Sears Canada, consumer electronics and Kmart apparel.”

Key Stats:

Last quarter marked the fifth straight quarter that the company saw shrinking gross margins as gross margin fell 0.6 percentage point to 25.9% from the year earlier quarter. Over that time, margins have contracted on average 0.9 percentage point per quarter on a year-over-year basis.

Revenue has fallen in the past four quarters. Revenue declined 1.2% to $10.33 billion in the second quarter. The figure fell 3.4% in the first quarter from the year earlier and dropped 0.8% in the fourth quarter of the last fiscal year from the year-ago quarter.

The company has now fallen short of analyst estimates for the last three quarters. It missed the mark by 49 cents in the second quarter and by 17 cents in the first quarter.

Looking Forward: Analysts have a more positive outlook about the company’s results for next quarter. The average estimate for fourth quarter is $3.25 per share, an increase from $3.17 sixty days ago. The average estimate for the fiscal year has reached a loss of $1.79 per share, down from a loss of 52 cents ninety days ago.

Competitors to Watch: J.C. Penney Company, Inc. (NYSE:JCP), Kohl’s Corporation (NYSE:KSS), Macy’s, Inc. (NYSE:M), Dillard’s, Inc. (NYSE:DDS), Wal-Mart Stores, Inc. (NYSE:WMT), Saks Incorporated (NYSE:SKS), The Bon-Ton Stores, Inc. (NASDAQ:BONT), Target Corporation (NYSE:TGT), Overstock.com, Inc. (NASDAQ:OSTK), and Nordstrom, Inc. (NYSE:JWN).

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(Company fundamentals provided by Xignite Financials. Earnings estimates provided by Zacks)

 

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