Sears Holdings Corp. (Hoffman Estates, Ill.) reported a 20 percent gain in net income for its first quarter ended May 5, 2007.
Despite the income gain, however, domestic same-store sales declined 3.9 percent during the quarter. Sears stores suffered a 3.4 percent drop in same-store sales and Kmart’s stores dropped 4.4 percent. The company said these declines reflected both increased competition and the impact of external factors such as rising energy costs, a slower housing market and poor weather conditions during the latter part of the first quarter of fiscal 2007. In addition, Kmart experienced lower transaction volumes across most merchandise categories, most notably within home goods, health and beauty products, and food and consumables. Similarly, Sears recorded comparable-store sales declines across most merchandise categories and formats, with a notable decline in home appliance sales, reflecting both a slower U.S. housing market and the impact of increased competition.
“In part, our domestic operating results reflect the impact of some of the same challenges being faced by our customers, such as rising energy costs and a slower housing market,” said ceo and president Aylwin Lewis. “However, as an organization, we need to overcome these factors by better controlling costs and developing innovative solutions that better meet our customers' needs and allow us to generate a more reasonable level of profitability even in the face of such challenges.”