CEO Watch Sears Posts Dismal Earnings
Saying customers were forced to spend more of their money on the soaring cost of gas and food, Sears Holdings Chairman Eddie Lampert announced a quarterly loss of $56 million.
Sales fell to $11.1 billion, a 6 percent drop.
The results surprised analysts, who did not expect such a steep loss. Some of them warned of further hemorrhaging.
"It's going to get a lot worse," Howard Davidowitz, of the consulting firm Davidowitz & Associates, told the Associated Press. "Given these results, I think Lampert really has to now face up to major, major store closings."
Declining housing markets and the credit crunch have hurt Sears, say analysts. Stiff competition from similar retail outlets like Wal-Mart and J.C. Penny has also added to Sears Holdings woes.
Costco Wholesale, for example, one of several chains to lure customers away from Sears, reported a 32 percent quarterly increase in sales.
A steep drop in the purchases of home appliances and lawn and garden products hit Sears especially hard, according to AP.
"Our first quarter results reflect the difficult economic environment and intense competition for consumer business," W. Bruce Johnson, Sears Holdings' interim chief executive officer and president, told AP. "That said, since May 3, 2008, our sales declines have moderated somewhat."
Lampert said he doesn't expect a quick improvement in overall retail sales, at least not until end of year, but said he saw some evidence of improvement. Nonetheless, analysts say Lampert will have to shuffle business units and close some stores.
