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November 20, 2009

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Holiday offers fail to pay off for Sears

SEARS Holdings Corp said yesterday that it lost money for the second consecutive quarter as customers spent elsewhere despite a series of early holiday season promotions to bring them back to its brands.

The company led by hedge-fund financier Edward Lampert launched a major campaign to win over holiday shoppers -- with measures such as its new Christmas Club cash savings card for use at Sears and Kmart stores -- and capitalize on last year's successful holiday layaway program.

The owner of Sears and Kmart stores lost US$127 million, or US$1.09 per share, for the period ended October 31. That compares with a loss of US$146 million, or US$1.16 per share, a year earlier.

Excluding store closing costs and other items, Sears said it lost 81 cents per share.

Revenue fell 4 percent to US$10.19 billion from US$10.66 billion, but beat Wall Street's estimate for revenue of US$9.92 billion.

The company did see some improved business, with sales at Kmart stores open at least a year up 0.5 percent. The retailer said sales of toys, home goods and footwear helped boost performance.

But sales at domestic stores open at least a year dropped 2.3 percent, with the Kmart increase offset by a 4.6 percent decline at domestic Sears stores open at least a year.

The Sears dropoff was due to weaker sales in its home appliance, lawn and garden, tools and home electronics categories.

Total costs and expenses declined to US$10.3 billion from US$10.86 billion during the quarter. The retailer also lowered merchandise inventories to US$10.8 billion from US$11.4 billion. Domestic inventory levels fell to US$9.9 billion from US$10.5 billion, while inventory levels at Sears Canada dropped by US$28 million.


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