Sears resigned to flat or negative earnings growth

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Date: Thursday 28 Aug 2008

LONDON (ShareCast) - US department store Sears has given up hope of besting last year's earnings performance after a poor second quarter and continued evidence of a weakening economy.

The company’s second quarter net income slumped to $65m compared to $173m in the second quarter of last year.

Earnings per share dipped to 50 cents from $1.15, although this was ahead of expectations; analysts had been bracing themselves for an EPS figure as low as $0.33.

The earnings slide was largely due to poorer trading at Sears Domestic and at Kmart, which more than offset improved performance at Sears Canada.

“We expect to generate higher EBITDA in the second half of this year as compared to the corresponding period in 2007 as we benefit from our lower domestic inventory levels and continued vigilant expense management,” said Bruce Johnson, interim chief executive of Sears.

“Given our year-to-date results and the state of the economy, our current full-year EBITDA forecast, which assumes flat to modest comparable store sales declines for the rest of the year, is comparable to, but no longer exceeds, last year's EBITDA," Johnson added..

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