Sears Holdings Corporation reported its first quarter 2011 results.
"Our first quarter was adversely impacted by unfavorable weather, economic pressures facing our customers, and comparisons to last year's government-sponsored stimulus program relating to the purchase of appliances. However, we also fell short on executing with excellence. We cannot control the weather or economy or government spending. But we can control how we execute and leverage the potent set of assets we have," said Lou D'Ambrosio, Sears Holdings' Chief Executive Officer and President.
"We are taking actions intended to leverage our suite of assets, including extending our leadership position in appliances, capitalizing on the scope of our portfolio and marquee brands such as Kenmore, Craftsman, DieHard, and Lands' End, extending our lead in home services, revitalizing our Sears' apparel business and delivering an extraordinary customer experience at the store, online and in home. Everything will begin and end with the customer experience. These actions will be complemented with effective expense management and operational excellence."
Total revenues decreased $341 million to $9.7 billion for the quarter ended April 30, 2011, as compared to total revenues of $10.0 billion for the quarter ended May 1, 2010.
The domestic comparable store sales results included a decrease at Sears Domestic of 5.2% and Kmart of 1.6%. Decreases in sales for the quarter at Sears Domestic were primarily driven by the appliance, apparel and consumer electronics categories, partially offset by increases in the home, sporting goods, jewelry and footwear categories.
Apparel experienced slow spring/summer sales due in part to worse weather than the prior year. The Kmart quarterly decrease in comparable store sales was primarily driven by decreases in the food and consumables and pharmacy categories.
Operating loss for the quarter was $174 million in 2011 compared to operating income of $98 million in 2010.
Operating loss for the first quarter of 2011 includes expenses of $21 million related to domestic pension plans, store closings and severance.
We had cash balances of approximately $1.0 billion at April 30, 2011 (approximately $0.8 billion domestic and $0.2 billion at Sears Canada), $1.8 billion at May 1, 2010 and $1.4 billion at January 29, 2011.
Merchandise inventories at April 30, 2011 were $9.9 billion, as compared to $9.3 billion at May 1, 2010. Domestic inventory increased approximately $400 million from $8.5 billion at May 1, 2010 to $8.9 billion at April 30, 2011.
The increase was primarily at Kmart and was due to increased investment in the apparel, consumer electronics, sporting goods, toys and outdoor living categories. Sears Domestic inventory increased primarily due to lower than expected first quarter sales and timing of receipts in home appliances. Sears Canada's inventory levels increased approximately $145 million from May 1, 2010 to $959 million at April 30, 2011 primarily due to the change in exchange rates, the timing of merchandise receipts and increased purchasing activity to support anticipated sales increases in the apparel and home categories.
Sears Holdings Corporation
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