3rd-quarter loss helps push Sears' stock down

Analysts expected chain to earn a small profit

October 22, 2004|By Becky Yerak | Becky Yerak,CHICAGO TRIBUNE

CHICAGO - Sears, Roebuck and Co. reported a "disappointing" $61 million loss for the third quarter and warned its year-end numbers would fall short of earlier forecasts - surprise announcements that drove down the retailer's stock price by nearly 9 percent yesterday.

Casting blame on everything from record fuel prices to heavy merchandise markdowns to disruptive store renovations, Sears lost 29 cents a share in the third quarter, compared with a profit of 52 cents a share in the same period last year. Investors were counting on the nation's biggest department store chain to earn a penny a share, according to a Thomson First Call analyst survey.

As Sears enters its fourth year of falling sales, chief executive Alan Lacy has been under increasing pressure to deliver better results, and he warned that investors won't see them next quarter.

"Based on our sales and margin performance over the past two quarters, coupled with a more cautious holiday outlook ... we believe it's appropriate to lower our fourth-quarter sales and margin assumptions," he said.

Hoffman Estates, Ill.-based Sears has taken pains to improve its merchandise offerings and store presentation. That's particularly critical since Sears sold its profitable credit-card business last year and now depends solely on its retail operations - a business that is struggling with same-store sales down 4 percent from the third quarter a year ago.

"We really thought we had valid reasons for expecting a better performance in the third quarter, but what we got was awful," said Retail Forecasting President Kurt Barnard. "Sears needs a credible strategy - or even tactics - that will prevent a recurrence of this kind of performance."

The Chicago Tribune is a Tribune Publishing newspaper.

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