RAPAPORT... Sears reported that its first-quarter sales fell 2.8 percent year on year to $9.27 billion. However, the retailer improved gross margin to 27.7 percent from 26.7 percent for the period that ended on April 28, 2012. Furthermore, Sears reported a profit of $194 million, reversing its loss of $170 million one year ago. Net income per share rose to $1.78 compared with a loss of $1.53.
The results were indicative of Sears Holdings' strategy to manage the liquidity of their business, both short term and long term. Rob Schriesheim, Sears Holdings' chief financial officer, said, ''We took several actions in the first quarter of 2012 to build the strength of our liquidity position. First, we completed the previously announced sale of U.S. and Canadian stores and leasehold interests, which generated cash proceeds of $440 million. In addition, we progressed with our plans to separate Sears Hometown and Outlet businesses through a transfer to electing shareholders.''
Schriesheim added that “the transaction is still expected to close in the third quarter of 2012 and generate in the range of $400 million to $500 million in cash proceeds.”
The quarterly results also pointed to Sears' improved inventory management, a key part of its strategy to boost the company’s operating performance. Inventory balances for the quarter declined 10 percent year on year to $8.8 billion. Total debt for the company also decreased 9 percent to $3.2 billion.
Lou D'Ambrosio, Sears Holdings' chief executive, said, ''We are pleased with the results for the first quarter and our progress towards restoring profit growth and transforming our company. Our actions were driven by a focus on three core priorities: 1) enhancing financial and operational discipline; 2) improving our core retail operations; and 3) leading customer based innovation through integrated retail and an engaging membership program, Shop Your Way Rewards. I want to thank all the associates at Sears Holdings for their commitment and hard work in delivering the first quarter results.''
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