Sears Holdings Corp. (Hoffman Estates, Ill.) reported a 99 percent drop in third-quarter profit Thursday, narrowly missing its first-ever losing quarter. Sales for the period ended Nov. 3, 2007, slipped 3 percent and same-store sales decreased 4.2 percent at Sears stores and 5 percent at Kmart, with notable declines in clothing and lawn and garden at both
The drop in profits was blamed both on the weak sales and on continuing investment losses under chairman Edward Lampert, the heralded hedge fund manager. The retailer attributed the weaker sales to increased competition, light consumer spending because of the weak housing market and credit concerns, and unseasonably warm weather, which hurt sales of apparel and other seasonal merchandise. A falloff in home construction has cut into its sales of major appliances.
It was the worst quarter since Lampert formed the company by combining Sears and Kmart in March 2005.
“We are very disappointed in our performance for the third quarter,” said president and ceo Aylwin Lewis. “We cannot blame our results entirely on the retail and macro-economic environments. We have much on which to improve and are working hard to do so.”
Sears also warned it expects difficult economic conditions to persist in the near-term, with sales and gross margin likely continuing to be pressured through the rest of the year.