HOFFMAN ESTATES, Ill. Hoffman Estates, Ill.-based retail giant Sears Holdings posted a net loss of $39 million in the second quarter -- a big improvement over the $94 million loss posted in the same quarter last year.
Comparable-store sales at U.S. Kmart and Sears stores slipped 2.2%. Comps fell 2.8% at Sears Domestic, with weakness in power lawn and garden, tools and consumer electronics, the company said.
Revenues for the company and its 3,900 full-line and specialty retail stores in the United States and Canada were $10.458 billion, down slightly from $10.551 billion in the same quarter last year.
"Kmart continued to improve its performance during the second quarter, as an improvement in its gross margin rate led to increased profitability," said W. Bruce Johnson, Sears Holdings' interim CEO and president. "Overall, our total revenues declined only slightly despite the uncertain economic environment faced by our customers. Expense discipline remained constant in the second quarter as reductions in selling and administrative expenses were achieved even as we continued to invest in initiatives designed to improve our customers' experiences."
He pointed to investments on multi-channel retailing offerings and the launch of the "Shop Your Way Rewards" program, as two key initiatives. Under the rewards program, 1% of purchases at Kmart, Sears and mygofer.com are refunded in the form of store credit to the customer's loyalty card.
The decline in total revenue for the quarter was primarily a result of a 2.2% decrease in domestic comparable-store sales and the effect of having fewer Kmart and Sears full-line stores in operation, partially offset by an increase of $96 million due to changes in the Canadian foreign exchange rate.
A decrease in gross margin rate of 40 basis points at Sears Domestic was primarily due to reduced margins in home services, and a decrease in gross margin rate of 150 basis points at Sears Canada, the company said.
Operating income for the second quarter of 2010 and 2009 includes expenses of $37 million and $103 million, respectively, related to domestic pension plans, store closings and severance.