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News > Companies
Bad debt sinks Sears profit
April 23, 1998: 10:41 a.m. ET

Number-two retailer cites charge-offs, later Easter for 27 percent drop in net
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NEW YORK (CNNfn) - A higher rate of delinquencies and charge-offs increased bad-debt expenses and dampened first-quarter earnings at Sears, Roebuck & Co., though the nation's number two retailer handily topped analysts' expectations.
     Sears reported net income of $133 million, or 34 cents a diluted share, down from $182 million, or 46 cents a share, a year earlier. Revenues rose 4.9 percent to $9.16 billion from $8.73 billion.
     Wall Street estimates, compiled by First Call, were for per-share earnings of 23 cents a share. The better-than-expected performance helped to drive Sears (S) shares up 1-3/8 in early trading Thursday to 59-7/8.
     Sears blamed a substantial increase in the provision for uncollected accounts over the year-ago period for the 27 percent decline in net income. The provision jumped in the first quarter to $387 million from $242 million the year before, a nearly 60 percent spike.
     (Click here to see Sears one-year intraday stock performance)
     Sears also said that its credit business, "although down substantially from the same period last year," had performed "somewhat better" than expected.
     On the domestic front, Sears said its retail revenues rose 5.9 percent to $8.44 billion from $7.97 billion a year ago. Those numbers, Sears noted, would have been higher were it not for a shift in the Easter holiday selling to the second quarter and increased clearance markdowns.
     Company officials said the adverse impact was offset by strength in services businesses and direct response, along with relatively robust performance in the international lines.
     "Excellent hardline sales performance across the full range of home appliances and electronics contributed strongly to our revenue growth, continuing recent trends," said Arthur Martinez, Sears's chairman and chief executive officer.
     Domestic selling and administrative expenses represented 20.9 percent of total revenues, an improvement from last year's 21.6 percent. Net losses in international operations -- which now include only Sears's 55 percent stake in Sears Canada following its sale of a controlling stake in Sears Mexico in the first quarter of 1997 -- narrowed to $9 million, excluding the $36 million prior-year loss on the Sears Mexico sale.Back to top

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Most stock quote data provided by BATS. Market indices are shown in real time, except for the DJIA, which is delayed by two minutes. All times are ET. Disclaimer. Morningstar: © 2018 Morningstar, Inc. All Rights Reserved. Factset: FactSet Research Systems Inc. 2018. All rights reserved. Chicago Mercantile Association: Certain market data is the property of Chicago Mercantile Exchange Inc. and its licensors. All rights reserved. Dow Jones: The Dow Jones branded indices are proprietary to and are calculated, distributed and marketed by DJI Opco, a subsidiary of S&P Dow Jones Indices LLC and have been licensed for use to S&P Opco, LLC and CNN. Standard & Poor's and S&P are registered trademarks of Standard & Poor's Financial Services LLC and Dow Jones is a registered trademark of Dow Jones Trademark Holdings LLC. All content of the Dow Jones branded indices © S&P Dow Jones Indices LLC 2018 and/or its affiliates.