Sears Reports 1Q Shortfall

In advance of today’s annual shareholders meeting, Sears Holdings Corp. (Hoffman Estates, Ill.) has said same-store sales fell 4.7 percent at its Kmart stores and 2.4 percent at its Sears stores in the first 12 weeks of its first quarter. The 13-week quarter ends May 5, 2007.

The company attributed the Kmart performance to “lower transaction volumes across most businesses” and the Sears result reflect “a reduction in home appliances sales [due to] a slower U.S. housing market and increased competition, partially offset by an improvement in children's apparel sales.”

The discount retailer said it expects net income for the quarter to rise between 11 and 30 percent over a year ago, including “the favorable net impact of certain significant items which did not impact the prior year period. These significant items . . . include a gain related to a legal settlement, a dividend received by Holdings from its Sears Mexico investment, a curtailment gain related to changes made to Sears Canada benefit plans, a gain from insurance recoveries on stores damaged by hurricanes in 2005, partially offset by losses on total return swap investments.”

In the meantime, the former Kmart headquarters complex on Big Beaver Road in Troy, Mich., will be replaced with a new mixed-use retail center, called Pavillions of Troy, which will include luxury hotels, specialty shops, upscale condos, offices and entertainment venues. Richardson Development Group (Reston, Va.) and Boorn Partners (Cincinnati) unveiled plans for the 40-acre site near Michigan's premier mall, Somerset Collection.

The project officials said the center will combine commercial and community amenities, and will even include an ice-skating rink.

Kmart's former headquarters building, which opened in 1972, was vacated in 2005 after the company acquired Sears and moved to Sears' headquarters in Hoffman Estates.