Sears Holdings narrows losses in Q2 as comps decline

Lower comps driven by generic wave, drought, other factors

HOFFMAN ESTATES, Ill. — Sears Holdings, the parent company of Kmart, posted a 3.7% decline in same-store sales and a $132 million loss for second quarter 2012, according to financial results announced Thursday.

The loss was slightly smaller than the $152 million loss posted in second quarter 2011, while sales for the company were $9.5 billion, down $671 million, compared with the same period last year. The decline in comps included a 4.7% decline in Kmart comps and a 2.9% decline in Sears comps in the United States. Kmart's total sales during the quarter were $3.4 billion, compared with $3.6 billion in second quarter 2011.

"We continue to make progress against the priorities we outlines in our fourth quarter earnings release and call," Sears Holdings president and CEO Lou D'Ambrosio said. "In particular, we have improved our profit position, as we reduced expenses and expanded marring rate through more effective promotional design. We have also successfully lowered inventory, reduced debt from year end and enhanced our liquidity."

The company said the decline in comps came from price compression in consumer electronics, a decline in lawn and garden sales due to drought conditions in many parts of the country, improved inventory in seasonal merchandise leading to lower clearance sales primarily in the apparel categories and a decline in pharmacy sales due to increased use of generic drugs.

Meanwhile, the narrowing in the company's losses was due to a reduction in selling and administrative expenses and an improvement in gross margin rate, the company said.

As of July 28, the company operated 1,261 Kmart stores and 814 domestic Sears stores, compared with 1,304 Kmart stores and 884 domestic Sears stores as of July 30, 2011.

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