Sears 1Q Earnings Up, Sales Down

Hoffman Estates, IL, June 1, 2007--Sears Holdings reported a 20 percent increase in earnings, helped by a legal settlement and other special gains, but sales declined at both its Sears and Kmart units.

The company reported net earnings that rose to $216 million, or $1.40 a share, in the first quarter ended on May 5, from $180 million, or $1.14 a share, a year earlier.

In early May, Sears said it expected net income of $1.30 to $1.53 a share.

Excluding special items, earnings fell to $1.10 per share from $1.11. Analysts on average were expecting $1.22

Sales fell 2.5 percent to $11.7 billion, and same store sales were down 3.9 percent.

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"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," Chief Executive Aylwin Lewis said in a release. "However, as an organization, we need to overcome these factors by better controlling costs and developing innovative solutions that better meet our customers' needs."

By brand, same store sales declined 3.4 percent at Sears and fell 4.4 percent at Kmart.