Sears Holdings Warns of Q1 Loss as Sales Lag

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Hoffman Estates, IL—Shares of Sears Holdings Corp. fell in trading this morning after the company said Monday said it would post a bigger-than-expected first quarter loss as sales of appliances, consumer electronics and apparel were weak. The company said that same-store sales fell 3.6% in the quarter, with the appliances, consumer electronics and apparel weak.

For the quarter ending April 30, Sears expects a net loss of between $145 million and $195 million, or between $1.35 and $1.81 per share. That’s a drop from the company’s first quarter 2010 when it reported net income of $16 million or 14 cents a share. Analysts’ average estimate expected earnings of 3 cents a share in the first quarter.

Unseasonably Cold Weather Hurts Spring Apparel Sales

Sears Holdings’ comparable store sales–or sales in stores open for at least a year–declined 3.6% in the quarter from last year. Its Kmart division posted a 1.6% decline in comparable store sales, while the Sears domestic stores comparable sales dropped 5.2%. Sears Canada also didn’t fare much better, with comparable sales expected to drop 9.2%.

Citing drops in drop in its appliance, apparel and consumer electronics divisions, the company said appliance sales were hurt by the comparison from the year-earlier results. However, spring and summer apparel sales were dented by unseasonably cold weather, the company said.

The company also announced that its board has approved the repurchase of up to an additional $500 million share repurchase. This authorization is in addition to the $86 million worth of shares that remain available for repurchase under the company’s existing repurchase program.

Sears is down more than 9% today after the company warned that it would post a bigger-than-expected loss in its fiscal first quarter, which ended April 30. The company said late yesterday that same-store sales fell 3.6% in the quarter, with the appliances, consumer electronics and apparel weak.

The appliance figure is particularly troubling, since it is a core sales area for Sears. Moreover, the March durable goods report from the Commerce Department indicated that sales of appliances, in particular, were strong in the overall economy.

Sears, like other retailers, is facing challenges on several fronts. Consumers, paying much Along with the downbeat guidance, Sears also announced a $500 million share repurchase program, but investors aren’t paying much heed to it today.

Sears, which hosts its annual shareholder meeting today, has seen its shares drop 38% in the past year and is trading at 76, down from April 2010 highs around 122,  Dow Jones reported.

“These results point to the increasingly dire prospects for Sears,” said Credit Suisse analyst Gary Balter. “While the company increased its projected buyback, even that will become problematic should the cash flow continue its deterioration.”

Edward Lampert, a hedge-fun investor who holds a majority of the company, has been criticized by Wall Street for refusing to invest in store upgrades, which analysts said are key to inviting consumers.

In February, the company named Lou D’Ambrosio as ceo after a three year vacancy.

Final results are expected on or about May 19, Sears said.