Hoffman Estates, Ill. Sears Holdings Corp.'s first-quarter net income fell 38% on thinner profit margins at its Sears chain, squeezed by discounts on appliances. The chain said its net income fell to $16 million in the quarter ending May 1, down from $26 million a year earlier.
Revenue fell slightly to $10.05 billion from $10.06 billion a year ago because the company has 63 fewer stores than in last year's first quarter.
The appliance price discounts offset a turnaround in revenue at the retailers' Sears and Kmart stores, breaking a long string of declines at Sears stores. It was Kmart's third consecutive quarter of rising revenue at stores open at least a year. The thinner profit margins are a setback to a company that has posted rising net income in recent quarters, a result of closing stores and slashing expenses.
Same-store sales at Sears stores rose 1.2%, fueled by appliance purchases under the government's cash for appliances program, which offers rebates on energy-efficient items. Kmart's same-store sales rose 1.7%, driven by increases in clothing, home items and toys.
Sears plans to focus on its long-struggling clothing business in hopes of attracting new and younger shoppers, officials told investors at the shareholders' meeting, the Associated Press reported.
The company will add a line of trendier clothing to Lands' End, which also has its own stores and is an increasing presence inside Sears stores, to draw younger customers. It also plans a line of store-brand products at Kmart.
Additionally, Sears plans to reinvent much of its Kenmore line of appliances, expand layaway at both Sears and Kmart and add more high-end fitness equipment at Sears.