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Sears expects record 1Q
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April 5, 2000: 1:50 p.m. ET
No. 2 U.S. retailer sees earnings topping estimates by a substantial margin
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NEW YORK (CNNfn) - Sears Roebuck & Co. said Wednesday it will post a record first-quarter profit that will top forecasts by one-third and easily exceed year-ago earnings figures.
The nation's No. 2 retailer said its earnings per share will come in between 62 cents and 67 cents a diluted share for the period.
Analysts surveyed by earnings tracker First Call Corp. predicted the company to earn 46 cents a share in the quarter, up from 38 cents a year earlier.
Sears (S: Research, Estimates) attributes the gain to improved online sales, strong credit business, good results in Canada and a share repurchase program.
S  ears, the nation's second-largest retailer behind Wal-Mart Stores Inc., said that its percentage rise in annual earnings per share should be in "the low- to mid-teen" range. First Call currently forecasts annual earnings of $4.23 a share for the fiscal year, a 9 percent gain over last year's $3.89.
Sears also exceeded estimates for the previous two quarters due to improved margins rather than sales growth, Wayne Hood, analyst with Prudential Securities, said.
"The market has been looking for a top-line story, and this has never been a top-line story," he said. He has a buy recommendation for the company and a $50-a-share 12-month target price.
Unlike other major retailers, Sears reports results on a calendar-year basis, so its first quarter ended March 31.
The company reported strong results for March sales. Sales in U.S. stores open at least a year rose 3.8 percent in the five weeks ended April 1. Overall domestic sales gained 5.4 percent to $2.7 billion, while total sales rose 6 percent to $3.6 billion.
For the first nine weeks of its fiscal year, U.S. same-store sales rose 3.3 percent, while total domestic sales gained 4.8 percent to $4.5 billion, while total sales rose 4.3 percent to $6.3 billion.
Mark Picard, an analyst with Lazard Freres & Co. LLC, said he thought earnings estimates on the company were conservative. Lazard upgraded its rating of Sears to "outperform" from "hold" on Jan. 21 because of its profitability and the growth of its e-commerce initiatives.
"The magnitude of the performance was somewhat surprising. The retail business seems to be improving at a faster rate than we would have anticipated," Picard said.
 The news follows on the heels of several initiatives Sears announced in recent months, including the launch of a Web-based business-to-business alliance with European retailer Carrefour, and new Internet strategies that include a Web site with home improvement guru Bob Vila, called Bobvila.com.
Sears will invest $150 million to $200 million this year on building out its e-commerce initiatives, Picard said.
Last month, Sears' 60-year-old CEO Arthur Martinez, who turned the company around in the 1990s by eliminating the catalog and developing the "Softer side of Sears" marketing campaign, announced his intentions to retire.
Sears shares rose 6-7/16, or 21 percent, to 36-16/15 in afternoon trading on the New York Stock Exchange Wednesday. 
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Sears
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