Sears Holdings Earnings Cheat Sheet: Misses Street Estimates as Loss Worsens

S&P 500 (NYSE:SPY) component Sears Holdings Corporation (NASDAQ:SHLD) reported its results for the second quarter. Sears Holdings Corporation 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 Second Quarter

Results: Loss widened to $146 million ($1.37 per diluted share) from $39 million (loss of 35 cents per share) in the same quarter a year earlier.

Revenue: Fell 1.2% to $10.33 billion from the year earlier quarter.

Actual vs. Wall St. Expectations: SHLD reported an adjusted net loss of $1.13 per share. By that measure, the company fell short of the mean analyst estimate of a loss of 46 cents per share. Analysts were expecting revenue of $10.13 billion.

Quoting Management: Lou D’Ambrosio, Sears Holdings’ Chief Executive Officer and President, said, “We are not satisfied with our results and are taking actions to turn around our performance in a challenging economic environment.While we improved our revenue trend, including growing our online business by over 30%, we had lower gross margins. The margin decline was due to markdowns taken to clear seasonal inventory and promotional activity.Inventory was tightly managed, as we finished the quarter with domestic inventory $75 million lower than prior year compared to the first quarter when inventory was $416 million higher than prior year.”

Key Stats:

Gross margins fell 1.2 percentage points to 25.8%. The contraction appeared to be driven by falling revenue, as the figure fell 1.2% from the year earlier while costs rose 0.4%.

Revenue has fallen in the past four quarters. Revenue declined 3.4% to $9.71 billion in the first quarter. The figure fell 0.8% in the fourth quarter of the last fiscal year from the year earlier and dropped 5% in the third quarter of the last fiscal year from the year-ago quarter.

The company has now fallen short of estimates in the last two quarters. In the first quarter, it missed expectations by 17 cents with a loss of $1.39 versus a mean estimate of a loss of $1.22 per share.

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), Amazon.com (NASDAQ:AMZN), Overstock.com, Inc. (NASDAQ:OSTK), and Nordstrom, Inc. (NYSE:JWN).

Investing Insights: Steve Jobs Prepares to Deliver a New Catalyst for Apple’s Stock.

(Source: Xignite Financials)